Investor Kay Yang faces state charges while also under federal investigation. What to know

While under federal investigation for alleged money laundering and wire fraud, Milwaukee-area investor and developer Kay Yang was recently jailed for a week in connection with state felony charges for filing false documents.

Yang, 42, is charged with four counts of criminal slander of title, according to Ozaukee County Circuit Court records.

She has yet to comply with a federal judge's 2023 order to repay $4.06 million to investors, and pay the same amount as a fine. That civil order was issued after Yang used investment funds to finance her lifestyle − including casino gambling, luxury cars, and trips to Hawaii, Thailand, Cancun and Las Vegas, according to court documents.

Meanwhile, Yang has fought in court over an Asian supermarket on Milwaukee's northwest side that fell into financial trouble under her control.

Here's what to know.

A state cease and desist order and a failed development

Milwaukee Journal Sentinel readers first learned about Yang through a November 2020 article about her agreement to repay investors nearly $17 million.

That came after the Wisconsin Department of Financial Institutions issued a cease and desist order against Yang for working as an investment adviser and selling investments without a license.

Meanwhile, a group led by Yang earlier that fall received city approval to do a $20 million expansion of 5xen Super Asian Market, 6300 N. 76th St.

The Journal Sentinel reported in January 2022 the expansion wasn't proceeding. That was followed by a February 2022 article on a foreclosure suit centered on the market.

Money laundering, wire fraud investigation surfaces

In March 2022, federal court records showed Yang was under investigation for alleged money laundering and wire fraud. That includes a claim she used funds from investors to gamble millions of dollars at Milwaukee's Potawatomi Hotel and Casino.

That's according to a search warrant affidavit filed in U.S. District Court in connection with a raid on Yang's Mequon home.

That court record shows Yang is the subject of a criminal investigation in connection with a Ponzi scheme allegedly conducted through her firms: AK Equity Group LLC, AK Global Investing LLC, Xapphire Fund LLC, Xapphire G Fund LLC and Xapphire LLC.

A Ponzi scheme uses money from new investors to pay the returns promised to earlier investors. At some point, a Ponzi scheme runs out of new investors. And, because the underlying product isn't profitable, most of the scheme’s participants lose their money.

That Internal Revenue Service investigation hasn't yet resulted in criminal charges.

Federal agency files civil fraud claims

The U.S. Securities and Exchange Commission in April 2022 said Yang and her company, Xapphire LLC, raised $16.5 million by making false and misleading statements to around 70 investors, and misappropriated more than $4 million of their funds.

Yang told members of the Hmong American community in Wisconsin, Minnesota and other states she would invest their money primarily through foreign exchange trading; they could expect annual returns ranging from 20% to 50%, and the trading was consistently successful, the SEC complaint said.

In reality, Yang used less than half the investors' money for foreign exchange trading and had many months with large losses, it said.

It also alleged Yang misappropriated $4.06 million of the investors' money to fund her and her family's lifestyle, including spending on casinos, travel, homes and cars, and to repay investors in a previous venture.

U.S. District Court Judge J.P. Stadtmueller in April 2023 ordered Yang to repay $4.06 million to investors − and pay the same amount as a fine. Her husband, Chao Yang, was ordered to repay $830,502 of ill-gotten gains.

Asian market falls into financial trouble

Meanwhile, Yang's abandoned plans to expand 5xen Super Asian Market, and the related foreclosure suit, landed that business in dire straits, the Journal Sentinel reported in January 2023.

The business was known as Phongsavan Asian Market when it was launched in 2009 by Pai Yang (no relation to Kay Yang). Pai Yang expanded it in 2016 with a larger food court, event space, offices for health care providers, and more stalls for vendors to sell food items, traditional Hmong clothing and other goods.

She sold the business to Kay Yang's group, 5xen Inc., in April 2020 for $4.6 million, according to a copy of the purchase agreement filed in Milwaukee County Circuit Court.

But Pai Yang wasn't completely off the hook for the property's $3.5 million bank mortgage because the business was sold through a land contract. 5xen made a $250,000 down payment and agreed to make monthly payments to Pai Yang through the scheduled payoff date of April 2023, according to the contract.

Pai Yang said 5xen broke a promise to make the mortgage payments to Chicago-based Byline Bank.

Kay Yang told Milwaukee County Circuit Judge Thomas McAdams in a December 2022 letter that 5xen bought the market after Pai Yang approached her for help. She said the business was hurt by the COVID-19 pandemic and subsequent inflation.

Pai Yang regained control of the market in January 2023 through an order from McAdams. Pai Yang testified equipment and furnishings were improperly removed from the property − badly damaging a building.

After obtaining a $22.5 million judgment, Pai Yang went to court to acquire a neighboring property, which 5xen operated at 6270 N. 76th St., to help satisfy that debt.

Pai Yang recently told the Journal Sentinel she's working to rebuild the business, again known as Phongsavan Asian Market.

State felony charges tied to false documents

Kay Yang made headlines again this month after being charged in Ozaukee County Circuit Court with four counts of criminal slander of title.

The false documents include a lien claiming $4 million was owed for improvements and maintenance at her former Mequon home − which was sold in 2022 through foreclosure.

Other false liens included $11.1 million against the Ozaukee County Sheriff and $2.4 million against Halloin Law Group.

There were other false filings tied to her former Mequon house in an attempt to cloud the title − and make it impossible for the new owners to resell the property, the criminal complaint said.

Yang was released from jail after her supporters posted $100,000 in bail.

"I have a lot of people who love me," she said at an April 3 hearing.

Yang later told members of her Milwaukee church − some of whom posted bail money − she was arrested for exercising her rights by filing paperwork "to protect my private property."

That's according to a video of her recent appearance at Enduring Love International Church posted on the Facebook page of Hmong Social Media News.

A status hearing on Yang's case is set for April 23.

Tom Daykin can be emailed at tdaykin@jrn.com and followed on Instagram, X and Facebook.

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This article originally appeared on Milwaukee Journal Sentinel: What to know about Kay Yang's felony charges, federal investigation