SEC v. LUCA INTERNATIONAL GROUP, LLC; LUCA RESOURCES GROUP, LLC; LUCA ENERGY FUND, LLC; ENTHOLPY EMC, INC.; BINGQING YANG; LEI (LILY) LEI, et al., Northern District of California (July 6, 2015) — Complaint

1 JINA L. CHOI (NY Bar No. 2699718) 
JOHNS. YUN (CA Bar No. 112260) 
[email protected] 
2 
3 
SHEILA 
E. O'CALLAGHAN (CA Bar No. 131 032) 
ocallaghans@sec. gov 
4 
ALICE L. JENSEN (CA Bar No. 203327) 
[email protected] 
5 
Attorneys for 
Plaintiff 
6 SECURITIES AND EXCHANGE COMMISSION 
44 Montgomery Street, Suite 2800 
7 
San Francisco, 
CA 94104 
8 
Phone ( 415) 705-2500 
Fax(415)705-2501 
9 
10 
11 
UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 
SAN FRANCISCO DIVISION 
12 
13 
14 
SECURITIES 
AND EXCHANGE COMMISSION, Case No. 
15 
16 
v. 
Plaintiff, 
17 LUCA INTERNATIONAL GROUP, LLC; LUCA 
RESOURCES GROUP, LLC; LUCA ENERGY 
18 FUND, LLC; ENTHOLPY EMC, INC.; 
BINGQING YANG; LEI (LILY) LEI; ANTHONY 
19 V. POLLACE; and YONG (MICHAEL) CHEN, 
20 
Defendants, and 
21 
LUCA OPERATION, LLC; LUCA BARNETT 
22 SHALE JOINT VENTURE; LUCA TO-KALON 
ENERGY, LLC; LUCA OIL, LLC; LUCA I, 
23 LIMITED PARTNERSHIP; LUCA OIL II JOINT 
VENTURE; J&Q INT'L TRADING, INC.; 
24 SKYLINE TRADING, LLC; and XIANG LONG 
25 
ZHOU, 
Relief Defendants. 
COMPLAINT 
26 
27 
28 
Plaintiff Securities and Exchange Commission ("Commission") alleges: 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page1 of 26 

1 
2 
3 
SUMMARY OF THE ACTION 
1. This litigation arises from a $68 million affinity fraud orchestrated by defendant 
Bingqing 
Yang ("Yang" ) through her wholly-owned management companies, defendants Luca 
4 International Group, 
LLC, Luca Resources Group, LLC and Luca Energy Fund, LLC (together, the 
5 " Luca Managers"). 
From 2007 until at least 2014, Yang, her chief fundraiser defendant Lei (Lily) 
6 Lei, and the Luca Managers engaged in a fraudulent 
scheme targeting the Chinese American 
7 community as well as investors in Asia to invest in the unregistered offerings 
of a series of 
8 investment funds-relief defendants Luca Barnett Shale Joint Venture, Luca Oil, LLC, Luca To-
9 Kalon Energy, LLC, Luca I Limited Partnership, and Luca Oil II Joint Venture (together, the "Luca 
1 0 Funds")-controlled by Yang and the Luca Managers. 
11 2. Yang and Lei represented to investors that their money would be invested in oil and 
12 gas drilling operations, that they could expect annual rates 
of return of 20-30%, and that their 
13 investments were risk free. They guaranteed 12-15% returns to some investors. 
14 3. In reality, Yang, 
the Luca Managers and Lei deceived investors in the Luca Funds by 
15 misrepresenting that their operations were successful and projecting outsized investment returns, all 
16 the while knowing that the operations were losing millions 
of dollars and that the enterprise was 
17 sinking 
under a mountain of debt. 
18 
4. 
To prevent the scheme from collapsing, Yang comingled investor funds and used 
19 
new investor money to continue making sham profit payments to earlier investors, while diverting 
20 millions 
of dollars for personal and undisclosed uses, including the purchase of a $2.5 million home 
21 in an exclusive gated community in Fremont, California, pool and gardening services, a  family 
22 vacation to Hawaii and a 
golf junket. Luca International' s fonner CFO, defendant Anthony Poll ace, 
23 played a smaller role in the fraud but continued to solicit investors even after 
he was aware that the 
24 Luca Funds were not properly accounting for their expenses, that Yang was comingling investor 
25 
nioney and that the wells were producing very little oil and gas. 
26 5. From October 2011 to March 2014, Yang, Lei and Luca International targeted 
27 Chinese citizens who sought 
pennanent U .S. residence through the EB-5 Immigrant Investor Pilot 
28 Program, which provides a method for foreign investors to obtain a green card 
by meeting certain 
COMPLAINT 
2 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page2 of 26 

U.S. investment requirements, to invest in the Luca I. Limited Partnership. Yang, Lei and Luca 
2 International raised approximately $8 million from EB-5 investors purportedly to finance 
jobs and 
3 development costs for eight oil-and-gas drilling projects, through a loan to 
relief defendant Luca 
4 Operation, LLC, another entity controlled and 
owned by Yang. Yang told these investors that the 
5 loan they 
were making was fully secured, all the while knowing that Luca Operation was hopelessly 
6 in debt and, contrary to the rosy representations 
Yang made to investors, had no realistic possibility 
7 
of ever repaying the loan. 
8 6. Defendants Yang, Lei, and the Luca Managers violated the antifraud provisions of 
9 Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77q(a)] and Section 
10 10(b) 
ofthe Securities Exchange Act of 1934 ("ExchangeAct") [15 U.S.C. § 78j(b)] and Rule 10b-
11 5 thereunder [17 C.F.R. § 240.1 Ob-5] by making material misstatements and engaging in a 
12 fraudulent scheme, and defendant Poll ace violated the antifraud provisions 
of Section 17( a)(3) of 
13 the Securities Act [15 U.S.C. § 77q(a)(3)], while offering and selling interests in the Luca Funds. 
14 7. 
By virtue of their management of the Luca Funds, defendants Yang and the Luca 
15 Managers are investment advisers and violated Sections 206(1), 206(2) and 206(4) ofthe 
16 Investment Advisers Act of 1940 ("Advisers Act") [15 U.S.C. §§ 80b-6(1 ),  80b-6(2), and 80b-6( 4)] 
17 and Rule 206(4)-8 thereunder [17 C.F.R. 
§ 275.206(4)-8] by making material misrepresentations, 
18 engaging in a fraudulent scheme, and breaching their fiduciary duties to the Luca Funds. 
19 
8. Defendants Yang, Lei, and Luca International violated the registration provisions of 
20 Sections 5(a) and 5(c) of the Securities Act through the unregistered offer and sale of securities 
21 issued by the Luca Funds, while Pollace violated Section 5(c) of the Securities Act through the 
22 unregistered offer of such securities [15 U.S.C. §§ 77e(a) and 77e(c)]. 
23 9. Defendants Lei, 
Yong (Michael) Chen, and his company Entholpy EMC, Inc. 
24 violated Section 15( a) of the Exchange Act by receiving hundreds of thousands of dollars in 
25 commissions for soliciting investments in the 
Luca Funds without being registered as broker-
26 dealers, 
or persons associated with a broker-dealer, as required by the federal securities laws [15 
27 U.S;C. § 78o(a)]. 
28 
COMPLAINT 3 
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JURISDICTION AND VENUE 
2 I 0. The Commission brings this action pursuant to Sections 20(b ), 20( d) , and 22( a) of 
3 the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)], Sections 21(d), 2l(e), and 27 ofthe 
4 Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and Section 209(d) of the Advisers Act [15 
5 U.S.C. § 80b-9(d)]. This Court has jurisdiction over this action pursuant to Sections 20(b), 
6 20(d)(l), and 22(a) 
of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v(a)], Sections 
7 
2l(d), 2l(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and Sections 
8 209(d), 209(e), and 214 
of the Advisers Act [15 U.S.C. §§ 80b-9(d), 80b-9(e), and 80b-14]. 
9 Defendants, directly or indirectly, made use 
of the means and instrumentalities of interstate 
10 commerce or of the mails in connection with the acts, transactions, practices, and courses of 
11 business alleged in this Complaint. 
12 11. Venue is proper in this District pursuant to Section 22(a) ofthe Securities Act [15 
13 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)]. During the period 
14 described in this Complaint, Luca International, Luca Energy, and Luca Operation have maintained 
15 their principal places of business in Fremont, California, and Enthalpy maintains its principal place 
16 ofbusiness in Santa Clara, California, in this District. Defendants Yang, Pollace, and Chen also 
17 reside in this District. In addition, acts, practices, and courses of business that form the basis for the 
18 violations alleged in this Complaint occurred in this District. Under· Civil Local Rule 3-2( d), this 
19 civil action should be assigned to the San Francisco or Oakland Division because a substantial part 
20 
of the events or omissions which give rise to the claims alleged herein occurred in Alameda County. 
21 
22 
12. 
DEFENDANTS 
Bingqing Yang, 
age 44 of Fremont, California, is the founder, Chief Executive 
23 Officer and President ofLuca International Group, LLC. Yang founded and controls each ofthe 
24 Luca Managers and the relief defendants Luca Funds, as well as relief defendant Luca Operation. 
25 Yang exercised sole control over the finances, managed the operations, and supervised the 
26 employees 
of the Luca Managers and Luca Funds, as well as Luca Operation. Yang is  a Chinese 
27 citizen and pennanent resident 
of the United States.  During sworn testimony before the staff of the 
28 Commission in the investigation preceding the filing of this case, Yang asserted her Fifth 
COMPLAINT 4 
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Amendment privilege against self-incrimination in response to questions about her involvement 
2 with each Luca entity. 
3 
13. Lei ("Lily") Lei, age 34 of Monterey Park, California, is  the former Vice President 
4 
of Business Development of Luca International Group, LLC. Other than Yang, Lei was the 
5 principal salesperson responsible for selling interests in the Luca Funds.  Lei is  a Chinese citizen 
6 and pennanent United States resident. During sworn testimony before the staff 
of the Commission 
7 in the investigation preceding the 
filing of this case, Lei asserted her Fifth Amendment privilege 
8 against self-incrimination in response 
to questions about her involvement with any Luca entity. 
9 
14. Anthony Pollace, age 79 of Saratoga, California, was the Chief Financial Officer of 
10 Luca International from August 2011 to May 2013. Pollace was previously a financial consultant, 
1 1 chief financial officer and vice president 
of finance for several small privately-held companies. 
12 
15. Luca Managers 
13 (a) Luca International Group, LLC ("Luca International") is  a California 
14 limited liability company organized in 2005 with its principal place of business in Fremont, 
15 California. Luca International is  owned and controlled by Yang and functioned as an umbrella 
16 organization for all of the Luca Managers and Luca Funds, issuing marketing materials and 
17 advertisements. Luca International is  also the Managing General Partner of relief defendant Luca 
18 Barnett Venture, and claims to provide management services including the identification of oil and 
19 gas development prospects in exchange for management fees. 
20 
(b) Luca Resources Group, LLC ("Luca Resources") is  a Delaware limited 
21 liability company organized in 2011 with its principal place ofbusiness in Houston, Texas. Luca 
22 Resources is owned and controlled by Yang. Luca Resources serves as the manager of relief 
23 defendants Luca Oil, Luca To-Kalon, and Luca Oil II and claims to provide management services 
24 including the identification 
of oil and gas development prospects in exchange for management fees. 
25 (c) Luca Energy Fund, LLC ("Luca Energy") is  a Texas limited liability 
26 company organized in 2010 with its principal place 
of business in Fremont, California.  Luca 
27 Energy is owned and controlled by Yang. Luca Energy serves 
as the general partner of relief 
28 defendant Luca I and claims to control all of that partnership's day-to-day operations, management 
COMPLAINT 
5 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page5 of 26 

and actions in exchange for management fees. 
2 
16. Y ong ("Michael") Chen, age 51 of Sunnyvale, California, is  the principal and 
3 owner 
of Enthalpy. Chen is  a financial aid consultant and tax planner who solicited investors for 
4 Luca Funds through Enthalpy from 2009 
to 2013, Chen previously held securities licenses and was 
5 associated with a registered broker-dealer from June 2010 until February 2011, but was never 
6 associated with a registered broker-dealer in connection with his solicitation 
of investors for the 
7 Luca Funds. In 2012, Chen was fined $5,000 
by the Financial Industry Regulatory Authority 
8 ("FINRA") and suspended from associating with any FINRA member for two months for engaging 
9 in unauthorized outside business activity, including his activity through Enthalpy. 
10 17. Entholpy, EMC, Inc. d/b/a Mastermind College Funding ("Enthalpy") is  a 
11 California corporation with its principal place ofbusiness in Santa Clara, California that provides 
12 advice on financial planning for college. Enthalpy is  owned and controlled by Chen and has never 
13 been registered with the Commission in any capacity. 
14 
RELIEF DEFENDANTS 
15 18. The following individuals and entities are named as Relief Defendants in this action 
16 for the purpose of assuring complete relief. Each received investor money or property that was 
17 obtained in violation of the federal securities laws. 
18 19. Luca Operation, LLC ("Luca Operation") is  a Louisiana limited liability company 
19 organized in 2011 with principal places of business in Fremont, California and Lafayette, Louisiana. 
20 Luca Operation is  owned and controlled by Yang. Luca Operation often held leg
al title to the oil 
21 and gas interests in which the Luca Funds supposedly invested. Luca Operation also typically 
22 served as the holder of various bank accounts through which investor proceeds, investment receipts, 
23 and expense payments passed. Luca I had a first priority lien upon the assets of Luca Operation, but 
24 Yang pledged those same assets 
to other purported lenders. 
25 20. Luca Funds: Yang created the Luca Funds purportedly to invest in oil and gas 
26 drilling projects. Although each Luca Fund was established as a separate legal entity, Yang 
27 comingled investor funds among entities without regard for corporate forms. 
28 (a) 
Luca Barnett Shale Joint Venture ("Luca Barnett Venture") is  a California 
COMPLAINT 
6 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page6 of 26 

Joint Venture managed by Luca International. Between September 2007 and January 2010, 
2 approximately sixty investors in the 
United States, some of whom were unaccredited, invested 
3 about $2.4 million in Luca Barnett Venture. 
4 
(b) Luca Oil, LLC ("Luca Oil") is a Texas limited liability company managed 
5 by Luca Resources. Luca Oil is the successor entity 
of Luca Barnett Shale Resources LLC, which 
6 was formed as a Texas limited liability company in August 2008 and managed 
by Luca Resources. 
7 "Luca Oil" refers to both Luca Barnett Shale Resources LLC and the surviving Luca Oil entity, into 
8 which Luca Barnett Shale Resources LLC was merged in 
May 2011. From September 2008 to 
9 December 2012, approximately 120 investors in the United States and Japan (including some 
1 
o through pooled offshore entities), some of whmn were unaccredited, invested about $41 million in 
11 Luca Oil. 
12 
(c) 
Luca To-Kalon Energy, LLC ("Luca To-Kalon") is  a Texas limited liability 
13 company managed by Luca Resources. Between December 2011 and December 2013, 
14 approximately 400 investors 
in Japan invested about $9 million in Luca To-Kalon through a pooled 
15 offshore entity. 
16 (d) 
Luca I,  LP ("Luca I") is a Louisiana limited partnership managed by Luca 
17 Energy. Between October 2011 and March 2014, approximately twenty investors in China invested 
18 about $8 million 
in Luca I. The investments were part of an EB-5 immigration visa program, which 
19 provides a method for foreign nationals to obtain a green card 
by meeting certain investment 
20 requirements. To obtain the visa, investors had to make a qualified minimum $500,000 investment 
21 that would generate at least ten new jobs in the United States. 
22 (e) 
Luca Oil II, LP ("Luca Oil II") is a Texas General Partnership managed by 
23 Luca Resources. Between December 2012 and January 2014, approximately 100 investors in the 
24 United States, some of whom were unaccredited, invested about $7.9 million in Luca Oil II. 
25 21. 
J&Q Int'l Trading, Inc. d/b/a J&Q Imports ("J&Q") is a California corporation 
26 with its principal place 
of business in Monterey Park, California that purports to be in the wholesale 
27 auto business. 
J&Q and its owner Zhou received approximately $567,000 from Luca Operation to 
28 which they were not entitled. 
COMPLAINT 7 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page7 of 26 

22. Skyline Trading LLC ("Skyline") is a Maryland limited liability company with its 
2 principal place 
ofbusiness in Rockville, Maryland that purports to be in the wholesale trading 
3 business. Shortly after J&Q received $567,000 from Luca Operation, J&Q transferred 
4 approximately $360,000 to Skyline. Around the same time, Skyline purchaseq three luxury 
5 vehicles for approximately $310,000. Approximately $175,000 
of the purchase price was paid 
6 directly by Luca Operation, to which Skyline was not entitled. 
7 
23. 
Xiang Long Zhou, age 34, is  Lei's spouse. Zhou is a Chinese citizen residing in 
8 Monterey Park, California. Zhou is the owner 
of J&Q. 
9 
10 
11 
12 
A. 
24. 
FACTS 
Yang, Lei 
and the Luca Managers Fraudulently Raised Over $68 Million from 
Investors 
From September 2007 to March 2014, Yang, through the Luca Managers, and Lei, 
13 with the help of other defendants, illegally raised $68 million from investors in funds that they 
14 controlled purportedly to purchase interests in oil and gas ventures. Yang and the Luca Managers 
15 targeted many of the investors through Chinese-language television, radio and newspaper 
16 advertisements and investment seminars. Yang, through the Luca Managers, also targeted investors 
1 7 from Japan and China. 
18 
25. 
The investments were structured as an opportunity 
to earn profits in one of five funds 
19 including relief defendants Luca Barnett Venture, Luca Oil, Luca To-Kalon, Luca I and Luca Oil 
II. 
20 Yang, through the Luca Managers,,made investment decisions for the Luca Funds and received 
21 compensation from the Luca Funds in return. 
22 
26. 
Yang and Lei led investment seminars in which they represented that prospective 
23 investors could expect annual rates of return of20-30%, monthly distributions, and that their 
24 principal would be returned to them in three to five years. In at least one instance, in connection 
25 with an investment on or about June 28, 2012, Lei even guaranteed 12-15% returns in writing, 
26 stating 
"we promise a minimum annual return of 12% for the 1st anniversary and 15% for the 2nd 
27 anniversary. We shall be responsible to make up the shortage for you in case you fail to reach the 
28 said return."  Emails between Yang and Lei show that they attempted to conceal these guarantees 
COMPLAINT 
8 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page8 of 26 

from other employees of Luca Intemational. 
2 
27. During investment seminars, Yang, Lei and Luca International misrepresented that 
3 the Luca 
Funds were profitable, when in reality they were losing millions of dollars from their oil 
4 and gas investments, as described in Section C below. 
Yang and Luca Intemational paid monthly 
5 revenue distributions to investors that 
Yang and Lei characterized as purported "retums on 
6 investment." 
7 
28. Despite raising $68 million purportedly to fund oil and gas operations, as recently as 
8 
March 16,2015, the combined balance of the Luca Managers, Luca Operation and Luca Funds' 
9 
bank accounts was less than $12,000. Although Yang made some oil and gas investments, she 
1 0 misappropriated investor funds for personal purposes, misspent investor funds on a junket for 
11 potential investors, and commingled investor funds among the Luca Funds. Yang returned some of 
12 the monies raised from newer investors to other investors as profits in Ponzi-like fashion. In reality, 
13 Luca Intemational was a failing business and Yang had to raise new funds to keep the company 
14 afloat. 
15 
16 
17 
B. 
29. 
Yang, Through the Luca Managers, Misappropriated and Used Investor Funds 
for Improper Purposes 
Yang exercised her control over the Luca Managers and Luca Funds to 
18 misappropriate millions 
of dollars of investors' money. Yang and the Luca Managers promised 
19 prospective investors, 
by way of written offering materials prepared for each of the Luca Funds, that 
20 they would use proceeds to acquire, develop and operate oil and natural gas wells in specific places, 
21 including Texas, Montana, North Dakota, onshore in the Gulf of Mexico and Louisiana. Despite 
22 these promises, Yang, through the 
Luca Managers, misappropriated investor funds and created 
23 
sham transactions to enrich herself, to purchase a home and to allow herself and her family to live a 
24 lavish lifestyle. 
25 
26 
30. 
Yang Transferred $1 Million to Herself as Sham "Trademark Licensing Fees" 
In a particularly egregious 
example of Yang's misappropriation, on or about March 
27 21, 2012, Yang, through Luca Resources as 
manager for Luca Oil, transferred approximately $1 
28 million from Luca Oil toLuca Intemational, which she characterized in Luca International's books 
COMPLAINT 
9 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page9 of 26 

and records as purported trademark licensing fees. On or about March 30, 2012, Yang transferred 
2 $950,000 
of the $1 million to her personal bank account. 
3 31. However, in March 2012, Luca International had not registered any trademark logos. 
4 Furthennore, the logos lacked any genuine economic value 
to the Luca Funds. Rather, the 
5 characterization 
as trademark licensing fees served only to justify Yang' s misappropriation of 
6 investor money. 
7 
32. 
As late 
as a full year later, in or about March 2013, Yang was still having Luca 
8 International's in-house counsel draft trademark licensing agreements for the Luca Funds. Yang 
9 directed Poll ace 
to sign the agreements on behalf of the Funds, and Yang backdated some of the 
1 0 agreements by 
as much as two years. 
11 
12 
13 
Yang Used Investor Funds to Pay Personal Expenses 
33. In or around June 2012, Yang misappropriated an additional approximately $2.4 
million 
of investor funds. Yang used the funds to purchase a 5,600-square-foot residence in the 
14 Avalon Heights gated community of Fremont, California. 
15 34. On May 30,2012, Yang asked Pollace by email how to borrow $2.5 million from 
16 Luca Operation to purchase a house. Pollace informed Yang that she should not borrow money 
17 from Luca Operation, and Yang told Poll ace to disregard the request. 
18 35. Despite this, on June 4, 2012, Yang transferred $2,463,817 from Luca Operation 
to 
19 an account held in the name of Sansun Technology Ltd. ("Sansun"), a Chinese company controlled 
20 by her brother. A few days later, on June 7 and 
8, 2012, Sansun wired $2,431,950 to an escrow 
21 company that Yang had arranged to handle the purchase ofher house. To cover up her 
22 misappropriation ofthe $2.4 million, Yang falsely described in a June 4, 2012 email toLuca 
23 International's bookkeeper, and again in a June 5, 2012 "letter of intent" addressed to Yang' s sister-
24 in-law at Sansun, that the wire transfer 
to Sansun was for the purpose of making a deposit on an oil 
25 drilling rig in China. 
26 36. Yang misappropriated an additional 
$2 million of investor funds for a variety of 
27 personal expenses, but arranged to record these items on Luca International' s books as a "loan to 
28 owner."  Thus, in May 2011, Yang transferred $30,000 from Luca International's account to her 
COMPLAINT 
10 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page10 of 26 

personal bank account to pay for her 2010 personal taxes. In April20I2, Yang paid the United 
2 States Treasury approximately $20,000 from Luca International's account for her 
20II personal 
3 taxes. 
4 
37. 
In 20I2, Yang, through Luca Resources, used Luca Oil funds to pay for her children 
5 and a relative 
to travel to China and for the same relative's travel on three additional occasions, 
6 including a trip 
to Hawaii. In 20 II, Yang, through Luca International, used Luca Barnett Venture 
7 funds 
to pay for the travel ofher children, brother and sister-in-law. Additionally, in June 20I2 
8 Yang used money from the Luca Oil and Luca International accounts to pay for a family vacation to 
9 Hawaii. Yang also used Luca International's account to pay for pool and gardening services and 
10 her homeowner
's association dues from August 2012 through December 2014. 
11 38. By early 20I2, Yang was specifically advised by the CFO, Pollace, that she should 
12 discontinue paying for personal expenses out 
of corporate accounts. Even after the specific 
13 admonition, Yang continued to misuse investor money by using corporate accounts to pay personal 
14 expenses, including in 2012, private school contlibutions, in 2012 and 2013, martial arts, choir and 
15 music lessons for her children, and through 2014, the gardener, pool service and homeowner's 
16 association dues. 
17 
18 
39. 
Yang, Through the Luca Managers, Misused Investor Funds for a Marketing Junket 
The Luca Funds' offering materials which were issued by Yang through the Luca 
19 Managers, stated that investor money would be used for acquiring, developing and operating oil and 
20 natural gas wells, to pay legal expenses associated with the offerings, and to pay salaries associated 
21 with acquiring, developing and operating oil and gas investments in the United States. In addition 
22 to misappropriating investor funds for personal purposes, Yang, through the Luca Managers, also 
23 spent investor funds for undisclosed purposes that were inconsistent with the uses of funds 
24 described in the offering materials. For example, Yang used approximately $510,000 of investor 
25 funds to pay for a so-called "U.S. China Energy Summit," which was a  1 0-day, expenses-paid 
golf 
26 junket to Pebble Beach, California for potential investors from China in September 2012. Costs for 
27 the Summit included a $200,000 speaking fee for a fonner President 
of the United States and lavish 
28 dinners. 
COMPLAINT 
11 
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1 
40. Personal expenses and marketing junkets were not appropriate uses of investor funds 
2 under any 
of the Luca Funds' private placement memoranda. 
3 
4 
5 
6 
c. 
41. 
Yang, Lei and The Luca Managers Made False and Misleading Claims to Lure 
and Deceive Investors 
Yang, Lei and Luca International Made False and Misleading Statements Regarding 
Projected Returns and Risks 
From approximately September 2008 to January 2014, Yang, Lei and Luca 
7 International used false and misleading statements projecting rates 
of return on investment that were 
8 unfounded and contrary to actual operations in pitches 
to potential investors. For instance, a Luca 
9 Oil brochure Yang and Lei used to solicit investors contained statements regarding "estimated 20-
10 30% annual returns"  and charts of"estimated income" showing cumulative returns 
of 407.29% over 
11 twenty years. 
12 
42. 
In addition, a Luca Oil II brochure that Yang and Lei used to solicit investors from 
13 approximately December 2012 through January 2014 represented a "payback period" of"estimated 
14 4 years," a ten-year total return 
of"2.6 times,"  and a ten-year internal rate of return of"23%." Lei 
15 also cited false historical returns, telling at least one prospective investor in writing that the Luca 
16 Funds' returns have " always [been] between 15% to 20% annually." 
17 
43. Compounding these extreme and unfounded claims regarding returns, during the 
18 spring of 2011, Yang solicited investments from Japanese investors using brochures and 
19 PowerPoints which falsely claimed there was "zero risk of losing entire principal" and that there 
20 was a "predictable return." Lei made similar representations to prospective Chinese-American 
21 investors, one of whom emailed Lei and stated, "We are very interested in your project since you 
22 told 
me that there is 0% risk to join [it] and I trust you since we are all Chinese!" 
23 
44. 
Yang also represented that the monthly distributions for Luca Oil and Luca To-
24 Kalon would eventually increase to 2% 
of the principal invested. 
25 
45. Yang and Lei knew or were reckless in not knowing that the representations in the 
26 PowerPoints, brochures and other offering documents about both returns and risks were materially 
27 false and misleading. The estimated returns were not based on actual well results, but were based 
28 on unrealistic and unattainable assumptions. 
COMPLAINT 12 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page12 of 26 

1 
46. 
First, those projections assumed that every well would 
be 100% successful, when in 
2 reality the Vice President 
of Exploration told Yang at least as early as January 2012 that most of the 
3 wells had a likelihood 
of success of less than 60%. 
4 
47. 
Second, the forecasts assumed that all wells would 
be drilled and producing in the 
5 first year, even though the Vice President 
of Exploration told Yang it would take longer to identify 
6 well sites, negotiate leases, and commence drilling and production. Yang was told by employees 
7 that the estimated returns were inaccurate, but she failed to lower them. 
8 
48. 
Yang, Lei and Pollace were aware that the wells were not perfonning as well as 
9 projected. In at least one instance on or about March 
1, 2012, Lei advised Yang about how to 
1 0 conceal this infonnation from new investors by delaying access to certain perfonnance infonnation 
11 for at least six months. On or about January 29, 2013, Pollace commented toLuca International's 
12 Vice President of Production that it appeared the Luca Funds were "in some bad properties." 
13 
49. 
14 presentations. 
15 
16 
17 
50. 
Yang had final editorial control over these marketing brochures and PowerPoint 
Yang, Lei, and the Luca Managers Made False and Misleading Statements 
Regarding the Luca Funds'  Actual Profitability 
From at least April2009 through January 2014, Yang, through Luca International, 
18 distributed monthly reports to investors in certain 
of the Luca Funds, purporting to detail the oil and 
19 gas production for each operating well and the gross oil and gas revenues received 
by the Luca 
20 Funds for the month. 
Yang also approved, and Luca International enclosed with each report, a 
21 payment purportedly representing the investor's pro rata net distribution-i.e., the supposed net 
22 profits. Several existing investors invested more money.after receiving these monthly reports. 
23 
51. 
The monthly reports were materially false and misleading because the reports 
24 omitted any operating expenses incurred 
by the Funds. In reality, the costs of running the oil and 
25 gas drilling operations far exceeded the proceeds from the sales 
of oil and gas from the inception of 
26 the Luca Funds. Yang knew the distribution numbers on the reports and the monthly payments did 
27 not represent the profits 
of the business, because she comingled and used whatever money was 
28 available, including from operations and new money raised from investors in the Luca Funds, to 
COMPLAINT 
13 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page13 of 26 

1 make monthly payments to previous investors and to pay for operating and overhead expenses for 
2 the Luca Managers and Luca Funds. Pollace was aware that the Luca Funds were not properly 
3 accounting for their expenses and that Yang was comingling investor money. 
4 
52. 
A PowerPoint slide with a sample month's oil and gas revenue distributions was 
5 shown to investors to provide the false impression that the Fund was making a positive net 
6 distribution. 
7 
53. 
Yang had final editorial control over the PowerPoint slide and monthly reports 
to 
8 investors about the status of their investments. 
9 Yang, Through the Luca Managers, Made False and Misleading Statements 
Regarding Well Reserves 
10 
11 
54. 
In addition to the false and misleading representations about profitability, Yang also 
12 knowing! y made false  and misleading statements to investors about the amount of oil and gas 
13 reserves in Luca's well prospects to lure investors to invest. 
14 
55. 
The marketing brochures and monthly reports that Yang approved and distributed to 
15 investors misrepresented that the well prospects contained millions ofbarrels in oil reserves and 
16 billions 
of cubic feet in gas reserves. However, the tetm "reserves" is  a term of art that requires a 
17 petroleum engineer to certify that a well's petroleum quality meets certain criteria. Only three 
of 
18 the Luca Funds' twenty oil and gas wells had reports estimating reserves. The remaining "reserve" 
19 numbers were picked out 
of thin air. Yang was told by Luca International's former Vice President 
20 
of Production numerous times from April through November 2012 that use of the term "reserves" 
21 was misleading and inaccurate, but Yang continued to use the tenn "reserves" improperly in 
22 monthly investor reports through January 2014. As discussed above, several prospective and 
23 existing investors invested or invested rnore money after receiving these marketing brochures and 
24 monthly reports. 
25 
26 
27 
56. 
Yang and Luca Energy Falsely Promised the EB-5 Investors that Their Money 
Would Be Used 
to Make a Secured Loan 
From in or about October 2011 through March 2014, Yang, through Luca Energy, 
28 and Lei used the 
~uca I offering to target Chinese citizens who desired to obtain pennanent 
COMPLAINT 
14 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page14 of 26 

1 
2 
3 
residence in the United States through the EB-5 Visa Program. 
57. Defendants Yang and Luca Energy recruited 
EB-5 investors through investment 
seminars in China, some 
of which Pollace attended. Lei also recruited EB-5 investors. They each 
4 distributed brochures or presented PowerPoints that contained projected rates 
of return that were 
5 unfounded and inconsistent with the actual perfmmance 
ofLuca' s earliest funds, Luca Barnett 
6 Venture and Luca Oil. 
7 
58. 
Yang, through Luca Energy, and Lei represented that Luca I offered 
an investment 
8 opportunity 
to acquire EB-5 visas.  The Luca I private placement memorandum represented that all 
9 
of the investor proceeds, which ultimately totaled approximately $8 million, would be used to make 
10 a loan to Luca Operation and that this loan would finance development costs for eight oil and gas 
11 drilling projects. Luca Operation granted Luca I a security interest in Luca Operation's assets to 
12 assure repayment of the loan in five years. The loan and security agreement were signed by Yang 
13 as CEO ofboth Luca Operation and Luca I. 
14 59. Yang, Lei and Luca Energy failed to tell Luca I's investors that Luca Operation at 
15 the time of the agreement was already hopelessly in debt due to overdue accounts payable and 
16 lacked the cash to pay. 
17 60. In August 2013, while Yang, Lei and Luca Energy continued to raise money from 
18 new investors, the total amount of Luca Operation' s accounts payable had grown to more than $11 
19 million, most of which was more than ninety days delinquent, seriously undennining Luca 
20 Operation' s ability 
to repay the loan from Luca I. Yang, Lei and Luca Energy did not disclose this 
2 1 fact 
to prospective investors in Luca I. 
22 61. Also in August 2013, Yang further compounded the problem by bmTowing 
23 approximately $12 million from a lender in Hong Kong at  an interest rate 
of approximately 30%, 
24 and by making Luca Operation the guarantor 
of that loan' s repayment. 
25 
26 
D. 
62. 
The Luca Funds' Unregistered Securities Offerings 
Luca International, Yang and Lei offered and sold unregistered securities through 
27 investment seminars in Luca International' s offices and hotel conference rooms in California and in 
28 China. Pollace offered to sell unregistered securities by distributing Luca International's marketing 
COMPLAINT 
15 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page15 of 26 

2 
3 
4 
5 
6 
7 
8 
9 
materials primarily to institutional investors in the U.S. Pollace knew the Luca Funds'  wells were 
perfonning poorly when he met with and solicited institutional investors because he received 
infonnation about low production 
of oil and gas from Luca Intemational' s fonner Vice President of 
Production. 
63. Chen is a financial aid consultant and tax planner who solicited investors for Luca 
Intemational through his wholly-owned business 
Enthalpy, which is not a registered broker-dealer. 
Chen was previously associated with a registered broker-dealer, but not in connection with his 
solicitation 
of investors for the Luca Funds. 
64. Chen conducted seminars at which he recommended investing in the Luca Funds for 
1 0 their tax deductibility, as a method for investors to 
lower adjusted gross income in order to qualify 
11 for college financial aid. His presentations incorporated Luca Intemational' s charts showing 
12 projected 
retums that were materially misleading, as described above. 
13 
65. Lei and Chen were two of the Luca Funds' most successful fundraisers, eaming 
14 hundreds of thousands of dollars in commissions for recruiting investors for Luca, which typically 
15 represented between 6% and 11% of the amount invested. Lei received approximately $436,000 
16 and 
Chen received approximately $770,000 in transaction-based compensation. Yang used other 
17 persons to raise 
money from investors in Japan. 
18 66. Yang did not file registration statements with the. Commission for the offer or sale of 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
any of the Luca Fund securities. Luca Bamett Venture and Luca I filed Securities Act Forms D 
claiming exemptions from registration pursuant to Securities Act Rule 506. Luca Oil filed a 
Securities Act 
Form D claiming exemptions from registration pursuant to Securities Act Rules 505 
and 506. Neither exemption applied to the Luca 
Funds'  securities offerings because Yang, through 
Luca Intemational and 
Luca Energy, used gen eral solicitation in newspaper, television and radio 
advertisements to 
market the securities and invite the general public to investment seminars. 
67. 
Numerous investors in several of the Luca Funds were non-accredited, but the Luca 
Managers and Luca 
Funds never prepared or provided the required financial disclosure documents 
or audited financial statements to non-accredited investors. 
68. In fact, 
Yang and Lei told certain investors to indicate on the questionnaires that they 
COMPLAINT 16 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page16 of 26 

were accredited when they were not. 
2 E. The Luca Funds and Luca Managers Are On the Verge of Collapse 
3 69. In April 2014, Yang ceased making monthly payments to investors in the Luca 
4 Funds. Instead Yang proposed 
to convert their interests into equity investments in a holding 
5 company known 
as Sinotex, claiming the company would become publicly traded. 
6 70. 
In July 2014, Yang sold for $8.5 million the well interests in a project called "Bull 
7 Moose" that was generating the highest levels 
of oil and gas production for the Luca Funds. At the 
8 time 
of this sale, Luca Operation was the legal owner of the Bull Moose interests and according to 
9 representations in the Luca I private placement memorandum and the provisions of the loan and 
10 security agreement dated March 2, 2012, Luca I therefore had a security interest in the Bull Moose 
11 holdings. None of the Bull Moose sale proceeds were used to pay Luca Funds' investors, as a 
12 whole, or to repay the Luca I loan that was secured by the Bull Moose interest. 
13 71. Instead, Yang used the $8.5 million in proceeds from the sale of the Bull Moose well 
14 to pay past due expenses for drilling operations, to pay debts to foreign lenders, to pay some 
15 investors who had sued Yang and Luca International, and to transfer money to the Luca Managers. 
16 Yang also transferred approximately $567,000 to an account in the name of relief defendant J&Q, 
17 an entity owned by Lei's husband, relief defendant Zhou, between July 28 and August 18, 2014. 
18 J &Q transferred approximately $3 57,000 to relief defendant Skyline between July 24 and 
19 September 30, 2014. Skyline purchased three luxury vehicles for about $310,000 between August 
20 
11 and 13, 2014. Approximately $175,000 of the purchase price for the vehicles was paid directly 
21 by Luca Operation. Relief defendants Zhou, J&Q and Skyline did not perform any services for 
22 Luca that would have entitled them to compensation. 
23 
72. Since the fall of2014, Luca has been receiving only minimal amounts of revenue 
24 from the sale of oil and gas. Some investors have attempted, without success, to redeem their 
25 investments in the Luca Funds. 
26 
27 
28 
COMPLAINT 17 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page17 of 26 

1 
2 
3 
4 
5 
73. 
74. 
FIRST CLAIM FOR RELIEF 
(Violations 
of Section lO(b) of the Exchange Act and Rule lOb-5 by 
Yang, Lei, Luca International, Luca Resources and Luca Energy) 
(Securities Fraud) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
Defendants Yang, Lei, Luca International, Luca Resources, and Luca Energy, 
by 
6 engaging in the conduct set forth above, directly or indirectly, by use of means or instrumentalities 
7 
of interstate commerce, or of the mails, or of a facility of a national security exchange, with 
8 scienter; employed devices, schemes, or miifices to defraud; and engaged in acts, practices, or 
9 courses 
of business which operated or would operate as a fraud or deceit upon other persons, in 
10 connection with the purchase or sale 
of securities, in violation of Section 1 O(b) of the Exchange Act 
11 [15 U.S.C. § 78j(b)] and Rule 10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)], and 
12 unless restrained and enjoined will continue to violate these provisions. 
13 
75. 
Defendants Yang, Lei, and Luca International, 
by engaging in the conduct set forth 
14 above, directly 
or indirectly, by use of means or instrumentalities of interstate commerce, or of the 
15 mails, 
or of a facility of a national security exchange, with scienter made untrue statements of 
16 material fact or omitted to state material facts necessary in order to make the statements made, in 
17 light 
of the circumstances under which they were made, not misleading, in violation of Section 
18 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. §§ 
19 240.1 Ob-5(b )], and unless restrained and enjoined will continue to violate these provisions. 
20 
21 
22 
23 
24 
76. 
77. 
SECOND CLAIM FOR RELIEF 
(Violations 
of Sections 17(a) of the Securities Act by 
Yang, Lei, Luca International, Luca Resources and Luca Energy) 
(Securities Fraud) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
Defendants Yang, Lei, Luca International, Luca Resources, and Lpca Energy, have, 
25 
by engaging in the conduct set forth above, directly or indirectly, in the offer or sale of securities, by 
26 the use of means or instruments of transportation or communication in interstate commerce, or of 
27 the mails: (1) with scienter, employed devices, schemes, or artifices to defraud; (2) obtained money 
28 
or property by means of untrue statements of material fact or by omitting to state material facts 
COMPLAINT 
18 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page18 of 26 

necessary in order to make statements made, in the light of the circumstances under which they 
2 were made, not misleading; and (3) engaged in transactions, practices, or courses 
of business which 
3 operated 
or would operate as a fraud or deceit upon the purchasers of such securities. 
4 
78. By reason of the foregoing, Defendants Yang, Lei, Luca International, Luca 
5 Resources, and Luca Energy, have directly 
or indirectly violated Section 17(a) of the Securities Act 
6 [15 U.S.C. 
§ 77q(a)], and unless restrained and enjoined will continue to violate these provisions. 
7 THIRD CLAIM FOR RELIEF 
8 (Violations of Section 17(a)(3) of the Securities Act by Pollace) 
9 
10 
11 
79. 
80. 
(Securities Fraud) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
Defendant Pollace, has, by engaging in the conduct set forth above, directly or 
12 indirectly, in the offer or sale of securities, by the use of means or instruments of transportation or 
13 communication in interstate commerce, or of the mails, engaged in transactions, practices, or 
14 courses ofbusiness which operated or would operate as a fraud or deceit upon the purchasers of 
15 such securities. 
16 
81. 
By reason 
of the foregoing, Defendant Pollace has directly or indirectly violated 
17 Section 17(a)(3) 
ofthe Securities Act [15 U.S.C. § 77q(a)(3)], and unless restrained and enjoined 
18 will continue to violate this provision. 
19 
20 
21 
22 
23 
82. 
83. 
FOURTH CLAIM FOR RELIEF 
(Violations 
of Sections· 5( a) and (c) of the Securities Act by 
Yang, Lei and Luca International) 
(Unregistered Securities Offering) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
Defendants Yang, Lei, and Luca International, 
by engaging in the conduct described 
24 above, directly 
or indirectly, made use of means or instruments or transportation or communication 
25 in interstate commerce or 
of the mails, to offer to sell or to sell securities, or to carry or cause such 
26 securities to 
be carried through the mails or in interstate commerce for the purpose of sale or for 
27 delivery after sale. 
28 
84. 
No registration statement has been filed with the SEC or has been in effect with 
COMPLAINT 
19 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page19 of 26 

respect to any of the offerings or securities alleged herein, and no exemption from registration 
2 applies. 
3 
85. By reason of the foregoing, Defendants Yang, Lei, and Luca International Group 
4 have violated Sections 5(a) and 5(c) 
of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)], and 
5 unless restrained and enjoined will continue to violate these provisions. 
6 FIFTH CLAIM FOR RELIEF 
7 (Violations of Section S(c) of the Securities Act by Pollace) 
8 
9 
10 
86. 
87. 
(Unregistered Securities Offering) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
Defendant Pollace, 
by engaging in the conduct described above, directly or 
11 indirectly, made use of means or instruments or transportation or communication in interstate 
12 commerce or of the mails, to offer to sell securities, or to carry or cause such securities to be carried 
13 through the mails or in interstate commerce for the purpose of sale or for delivery after sale. 
14 
88. No registration statement has been filed with th e SEC or has been in effect with 
15 respect to any of the offerings or securities alleged herein, and no exemption from registration 
16 applies. 
17 
89. 
By reason of the foregoing, Defendant Pollace has violated Section 5(c) of the 
18 Securities Act [15 U.S.C. § 77e(c)], and unless restrained and enjoined will continue to violate this 
19 provisiOn. 
20 
21 
22 
23 
24 
90. 
91. 
SIXTH CLAIM FOR RELIEF 
(Violations 
of Sections 206(1) and 206(2) of the Advisers Act by 
Yang, Luca International, Luca Resources and Luca Energy) 
(Investment Adviser Fraud) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
At all relevant times, Defendants Yang, Luca International, Luca Resources, and 
25 Luca Energy were "investment advisers" within the meaning 
of Section 202(a)(11) of the Advisers 
26 Act [15 U.S.
C. § 80b-2(a)(l1)]. Defendants Yang, Luca International, Luca Resources, and Luca 
27 Energy each were in the business 
of providing investment advice concerning securities for 
28 compensation. Defendant Yang was also an investment adviser due to her ownership, management 
COMPLAINT 20 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page20 of 26 

1 and control of Defendants Luca International, Luca Resources, and Luca Energy. 
2 
92. 
As set forth above, Defendants Yang, Luca International, Luca Resources, and Luca 
3 Energy defrauded their clients, the Luca Funds, 
by misappropriating money from their advisory 
4 clients and engaging in self-dealing with their clients through a scheme to defraud and through 
5 transactions, practices, and courses 
ofbusiness which operated as a fraud or deceit upon their 
6 advisory clients. 
7 
93. 
Defendants Yang, Luca International, Luca Resources, and Luca Energy, by use of 
8 the mails or any means or instrumentality of interstate commerce, directly or indirectly, acting 
9 intentionally, knowingly 
or recklessly: (a) have employed or are employing devices, schemes, or 
10 artifices to defraud clients and/or potential clients; 
or (b) have engaged or are engaging in 
11 transactions, practices, or courses ofbusiness which operate as a fraud or deceit upon a client or 
12 prospective client. 
13 
94. 
As a result, Defendants Yang, Luca International, Luca Resources, and Luca Energy 
14 have violated Sections 206(1) and (2) 
of the Advisers Act [15 U.S.C. § 80b-6(1) and (2)], and 
15 
unless restrained and enjoined will continue to violate these provisions. 
16 
17 
18 
19 
20 
95. 
96. 
SEVENTH CLAIM FOR RELIEF 
(Violations 
of Section 206(4) of the Advisers Act and Rule 206(4)-8 by 
Yang, Luca International, Luca Resources and Luca Energy) 
(Investment Adviser Fraud) 
Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
At all times relevant to this Complaint, Defendants Yang, Luca International, Luca 
21 Resources, and Luca Energy acted as investment advisers to the Luca Funds, pooled investment 
22 vehicles as defined 
in Rule 206(4)-8(b) [17 C.F.R. § 275.206(4)-8(b)]. 
23 
97. 
Defendants Yang, Luca International, Luca Resources, and Luca Energy, while 
24 acting as investment advisers to pooled investment vehicles, by use of the mails, and the means and 
25 instrumentalities 
of interstate commerce, directly or indirectly, engaged in acts, practices, or courses 
26 
of businesses which were fraudulent, deceptive or manipulative. Defendants Yang, Luca 
27 International, Luca Resources, and Luca Energy made untrue statements 
of a material fact or 
28 omitted to state a material fact necessary to make the statements made, in the light 
of the 
COMPLAINT 
21 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page21 of 26 

1 circumstances under which they were made, not misleading, to investors or prospective investors in 
2 the pooled investment vehicles, and otherwise engaged in acts, practices, 
or courses of businesses 
3 that were fraudulent, deceptive 
or manipulative with respect to investors or prospective investors in 
4 the pooled investment vehicles. 
5 
98. 
By engaging in the conduct described above, Defendants Yang, Luca International, 
6 Luca Resources, and 
Luca Energy have violated Section 206(4) of the Advisers Act [15 U.S.C. § 
7 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. 
§ 275.206(4)-8], and unless restrained and 
8 enjoined will continue to violate these provisions. 
9 EIGHTH CLAIM FOR RELIEF 
10 (Violations of Section lS(a) of the Exchange Act by Lei, Chen and Entholpy) 
(Unregistered Broker-Dealers) 
11 
12 99. Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
13 100. Defendants Lei, Chen and Enthalpy, directly or indirectly, through use of the means 
14 
or instruments of transportation or communication in interstate commerce or the mails, acted as a 
15 broker and/or effected transactions in, and induced 
or attempted to induce the purchase or sale of, 
16 securities (other 
than an exempted security or commercial paper, bankers' acceptances or 
17 commercial bills) without being registered with the Commission in accordance with Section 15(b) 
18 
of the Exchange Act [15 U.S.C. § 78o(b)]. 
19 101. 
By reason of the foregoing, defendants Lei, Chen and Enthalpy violated Section 
20 15(a) of the Exchange Act [15 U.S.C. § 78o(a)], and unless restrained  and enjoined will continue to 
21 violate this provision. 
22 
NINTH CLAIM FOR RELIEF 
23 (Relief Defendants) 
24 102. Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 
25 103. 
ReliefDefendants Luca Operation and the Luca Funds received and may continue to 
26 hold investor funds that 
were obtained through violations of the federal securities laws, as alleged 
27 above. 
28 104. As set 
fmih above, in or around July and August 2014, Yang transferred 
COMPLAINT 22 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page22 of 26 

approximately $567,000 to the accounts of Relief Defendant Zhou and his company Relief 
2 Defendant J&Q. 
3 105. Shortly after receiving the funds, J&Q transferred approximately $360,000 to Relief 
4 Defendant Skyline. Around the same time Skyline purchased three luxury vehicles for 
5 approximately $310,000. Approximately $175,000 of the purchase price for the vehicles was paid 
6 directly 
by Luca Operation. 
7 106. Defendant 
Yang has transferred to Relief Defendants Zhou and J &Q money derived 
8 from the Defendants' violations described in this Complaint, to which Relief Defendants Zhou and 
9 J&Q have no legitimate claim. 
10 107. Defendant 
Yang and Relief Defendant J&Q have transferred to Relief Defendant 
11 Skyline money derived from the Defendants' violations described in this Complaint, to which 
12 ReliefDefendant Skyline has no legitimate claim. 
13 PRAYER FOR RELIEF 
14 WHEREFORE, the Commission respectfully requests that the Court: 
15 I. 
16 Enjoin Defendants Luca International, Luca Resources, Luca Energy, Yang and Lei, 
17 preliminarily and permanently from directly or indirectly violating Section 17(a) 
of the Securities 
18 Act [15 U.S.C. § 77q(a)], and Section 10(b) ofthe Exchange Act [15 U .S.C. § 78j(b)], and Rule 
19 10b-5 thereunder [17 C.F.R. 
§ 240.10b-5], and Defendant Pollace pennanently from directly or 
20 indirectly violating Section 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)]. 
21 II. 
22 Enjoin Defendants Luca International, Yang and Lei, preliminarily and permanently from 
23 directly or indirectly violating Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and 
24 77e(c)], and Defendant Pollace permanently from directly 
or indirectly violating Section 5(c) of the 
25 Securities Act [15 U.S.C. 
§ 77e(c)]. 
26 
III. 
27 Enjoin Defendants Luca International, Luca Resources, Luca Energy, and Yang, 
28 preliminarily and permanently from directly or indirectly violating Sections 206(1 ),  206(2) and 
COMPLAINT 
23 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page23 of 26 

1 206(4) ofthe Advisers Act [15 U.S.C. §§ 80b-6(1), 80b-6(2), and 80b-6(4)] and Rule 206(4)-8 
2 thereunder [17 C.F.R. § 275.206(4)-8]. 
3 IV. 
4 Enjoin Defendants Lei, Chen and Enthol
py pennanently from directly or indirectly violating 
5 Section 15(a) 
ofthe Exchange Act [15 U.S.C. § 78o(a)]. 
6 
V. 
7 Enter an Order preliminarily and pennanently enjoining Defendants Luca International, 
8 Luca Resources, Luca Energy, Yang and Lei from directly or indirectly participating in the 
9 issuance, offer, or sale 
of any security of any entity controlled by, or under joint control with, any of 
10 them, including but not limited to securities issued by Sinotex, as well as the acceptance of any 
11 money or anything of value by any Defendant for such securities. 
12 VI. 
13 Enter an Order preliminarily and permanently enjoining Defendants Luca International, 
14 · Luca Resources, Luca Energy, Yang and Lei from directly or indirectly soliciting any person or 
15 entity to purchase or sell any security. 
16 VII. 
17 Enter an Order appointing a receiver over Defendants Luca International, Luca Resources, 
18 Luca Energy, and ReliefDefendants Luca Operation and the Luca Funds 
to stop the fraud, marshal 
19 and preserve all remaining assets, clarify the entities' financial affairs, and investigate claims 
20 against Yang, Lei and other persons. 
2 1 VIII. 
22 Enter an Order freezing the assets pending final judgment 
of Defendants Luca International, 
23 Luca Resources, Luca Energy, Yang, Lei, and of Relief Defendants Luca Operation, the Luca 
24 Funds, 
J&Q, Skyline, and Zhou in specified assets or accounts obtained through the violations 
25 alleged herein, including the requirement that these Defendants and Relief Defendants repatriate all 
26 funds obtained through the violations that were sent to, or deposited into, any offshore accounts. 
27 IX. 
28 Enter an Order prohibiting Defendants Luca International, Luca Resources, Luca Energy, 
COMPLAINT 24 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page24 of 26 

Yang, Lei, and the ReliefDefendants from destroying documents and pennitting expedited 
2 discovery; and requiring accountings from Defendants Luca International, Luca Resources, and 
3 L
uca Energy. 
4 X. 
5 Enter an order barring Defendant Yang from serving as an officer or director of a public 
6 company pursuant to Section 20(e) 
ofthe Securities Act [15 § U.S.C. 77t(e)] and Section 21(d)(2) 
7 
of the Exchange Act [15 U.S.C. § 78u(d)(2)]. 
8 XI. 
9 Enter an Order requiring Defendants Luca  International, Luca Resources, Luca Energy, 
10 Yang, Lei, Chen, Enthalpy and the ReliefDefendants to disgorge their ill-gotten gains according to 
11 proof, plus prejudgment interest thereon. 
12 XII. 
13 Enter an Order requiring Defendants Luca International, Luca Resources, Luca Energy, 
14 Yang, Lei, Pollace, Chen and Enthalpy to 
pay civil penalties pursuant to Section 20(d) of the 
15 Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) ofthe Exchange Act [15 U.S.C. § 78u(d)]. 
16 XIII. 
17 Retain jurisdiction 
of this action in accordance with the principles of equity and the Federal 
18 Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that 
19 may be entered, or to entertain any suitable application or motion for additional relief within the 
20 
jurisdiction 
of this Court. 
21 
22 
23 
24 
25 
26 
27 
28 
COMPLAINT 
25 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page25 of 26 

XIV. 
2 Grant such other and further relief as this Court may detennine to be just, equitable, and 
3 
necessary. 
4 
5 
Dated: July 
_f, 2015 
Respectfully submitted, 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 
COMPLAINT 
26 
   Case3:15-cv-03101   Document1   Filed07/06/15   Page26 of 26 

1 JINA L. CHOI (NY Bar No. 2699718) 
JOHNS. YUN (CA Bar No. 112260) 

[email protected] 2 

3 
SHEILA E. O'CALLAGHAN (CA Bar No. 131 032) 

ocallaghans@sec. gov 
4 ALICE L. JENSEN (CA Bar No. 203327) 

[email protected] 
5 

Attorneys for Plaintiff 
6 SECURITIES AND EXCHANGE COMMISSION 

44 Montgomery Street, Suite 2800 
7 San Francisco, CA 94104 

8 Phone ( 415) 705-2500 
Fax(415)705-2501 

9 

10 

11 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 
12 

13 

14 
SECURITIES AND EXCHANGE COMMISSION, Case No. 

15 

16 
v. 

Plaintiff, 

17 LUCA INTERNATIONAL GROUP, LLC; LUCA 
RESOURCES GROUP, LLC; LUCA ENERGY 

18 FUND, LLC; ENTHOLPY EMC, INC.; 
BINGQING YANG; LEI (LILY) LEI; ANTHONY 

19 V. POLLACE; and YONG (MICHAEL) CHEN, 

20 Defendants, and 

21 
LUCA OPERATION, LLC; LUCA BARNETT 

22 SHALE JOINT VENTURE; LUCA TO-KALON 
ENERGY, LLC; LUCA OIL, LLC; LUCA I, 

23 LIMITED PARTNERSHIP; LUCA OIL II JOINT 
VENTURE; J&Q INT'L TRADING, INC.; 

24 SKYLINE TRADING, LLC; and XIANG LONG 

25 
ZHOU, 

Relief Defendants. 

COMPLAINT 

26 

27 

28 
Plaintiff Securities and Exchange Commission ("Commission") alleges: 

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1 

2 

3 

SUMMARY OF THE ACTION 

1. This litigation arises from a $68 million affinity fraud orchestrated by defendant 

Bingqing Yang ("Yang") through her wholly-owned management companies, defendants Luca 

4 International Group, LLC, Luca Resources Group, LLC and Luca Energy Fund, LLC (together, the 

5 "Luca Managers"). From 2007 until at least 2014, Yang, her chief fundraiser defendant Lei (Lily) 

6 Lei, and the Luca Managers engaged in a fraudulent scheme targeting the Chinese American 

7 community as well as investors in Asia to invest in the unregistered offerings of a series of 

8 investment funds- relief defendants Luca Barnett Shale Joint Venture, Luca Oil, LLC, Luca To-

9 Kalon Energy, LLC, Luca I Limited Partnership, and Luca Oil II Joint Venture (together, the "Luca 

1 0 Funds")- controlled by Yang and the Luca Managers. 

11 2. Yang and Lei represented to investors that their money would be invested in oil and 

12 gas drilling operations, that they could expect annual rates of return of 20-30%, and that their 

13 investments were risk free. They guaranteed 12-15% returns to some investors. 

14 3. In reality, Yang, the Luca Managers and Lei deceived investors in the Luca Funds by 

15 misrepresenting that their operations were successful and projecting outsized investment returns, all 

16 the while knowing that the operations were losing millions of dollars and that the enterprise was 

17 sinking under a mountain of debt. 

18 4. To prevent the scheme from collapsing, Yang comingled investor funds and used 

19 new investor money to continue making sham profit payments to earlier investors, while diverting 

20 millions of dollars for personal and undisclosed uses, including the purchase of a $2.5 million home 

21 in an exclusive gated community in Fremont, California, pool and gardening services, a family 

22 vacation to Hawaii and a golf junket. Luca International ' s fonner CFO, defendant Anthony Poll ace, 

23 played a smaller role in the fraud but continued to solicit investors even after he was aware that the 

24 Luca Funds were not properly accounting for their expenses, that Yang was comingling investor 

25 nioney and that the wells were producing very little oil and gas. 

26 5. From October 2011 to March 2014, Yang, Lei and Luca International targeted 

27 Chinese citizens who sought pennanent U.S. residence through the EB-5 Immigrant Investor Pilot 

28 Program, which provides a method for foreign investors to obtain a green card by meeting certain 

COMPLAINT 2 

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U.S. investment requirements, to invest in the Luca I. Limited Partnership. Yang, Lei and Luca 

2 International raised approximately $8 million from EB-5 investors purportedly to finance jobs and 

3 development costs for eight oil-and-gas drilling projects, through a loan to relief defendant Luca 

4 Operation, LLC, another entity controlled and owned by Yang. Yang told these investors that the 

5 loan they were making was fully secured, all the while knowing that Luca Operation was hopelessly 

6 in debt and, contrary to the rosy representations Yang made to investors, had no realistic possibility 

7 of ever repaying the loan. 

8 6. Defendants Yang, Lei, and the Luca Managers violated the antifraud provisions of 

9 Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77q(a)] and Section 

10 10(b) ofthe Securities Exchange Act of 1934 ("ExchangeAct") [15 U.S.C. § 78j(b)] and Rule 10b-

11 5 thereunder [17 C.F.R. § 240.1 Ob-5] by making material misstatements and engaging in a 

12 fraudulent scheme, and defendant Poll ace violated the antifraud provisions of Section 17( a)(3) of 

13 the Securities Act [15 U.S.C. § 77q(a)(3)], while offering and selling interests in the Luca Funds. 

14 7. By virtue of their management of the Luca Funds, defendants Yang and the Luca 

15 Managers are investment advisers and violated Sections 206(1), 206(2) and 206(4) ofthe 

16 Investment Advisers Act of 1940 ("Advisers Act") [15 U.S.C. §§ 80b-6(1 ), 80b-6(2), and 80b-6( 4)] 

17 and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8] by making material misrepresentations, 

18 engaging in a fraudulent scheme, and breaching their fiduciary duties to the Luca Funds. 

19 8. Defendants Yang, Lei, and Luca International violated the registration provisions of 

20 Sections 5(a) and 5(c) of the Securities Act through the unregistered offer and sale of securities 

21 issued by the Luca Funds, while Pollace violated Section 5(c) of the Securities Act through the 

22 unregistered offer of such securities [15 U.S.C. §§ 77e(a) and 77e(c)]. 

23 9. Defendants Lei, Yong (Michael) Chen, and his company Entholpy EMC, Inc. 

24 violated Section 15( a) of the Exchange Act by receiving hundreds of thousands of dollars in 

25 commissions for soliciting investments in the Luca Funds without being registered as broker-

26 dealers, or persons associated with a broker-dealer, as required by the federal securities laws [15 

27 U.S;C. § 78o(a)]. 

28 

COMPLAINT 3 

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JURISDICTION AND VENUE 

2 I 0. The Commission brings this action pursuant to Sections 20(b ), 20( d), and 22( a) of 

3 the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)], Sections 21(d), 2l(e), and 27 ofthe 

4 Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and Section 209(d) of the Advisers Act [15 

5 U.S.C. § 80b-9(d)]. This Court has jurisdiction over this action pursuant to Sections 20(b), 

6 20(d)(l), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v(a)], Sections 

7 2l(d), 2l(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and Sections 

8 209(d), 209(e), and 214 of the Advisers Act [15 U.S.C. §§ 80b-9(d), 80b-9(e), and 80b-14]. 

9 Defendants, directly or indirectly, made use of the means and instrumentalities of interstate 

10 commerce or of the mails in connection with the acts, transactions, practices, and courses of 

11 business alleged in this Complaint. 

12 11. Venue is proper in this District pursuant to Section 22(a) ofthe Securities Act [15 

13 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [1 5 U.S.C. § 78aa(a)]. During the period 

14 described in this Complaint, Luca International, Luca Energy, and Luca Operation have maintained 

15 their principal places of business in Fremont, California, and Enthalpy maintains its principal place 

16 ofbusiness in Santa Clara, California, in this District. Defendants Yang, Pollace, and Chen also 

17 reside in this District. In addition, acts, practices, and courses of business that form the basis for the 

18 violations alleged in this Complaint occurred in this District. Under· Civil Local Rule 3-2( d), this 

19 civil action should be assigned to the San Francisco or Oakland Division because a substantial part 

20 of the events or omissions which give rise to the claims alleged herein occurred in Alameda County. 

21 

22 12. 

DEFENDANTS 

Bingqing Yang, age 44 of Fremont, California, is the founder, Chief Executive 

23 Officer and President ofLuca International Group, LLC. Yang founded and controls each ofthe 

24 Luca Managers and the relief defendants Luca Funds, as well as relief defendant Luca Operation. 

25 Yang exercised sole control over the finances, managed the operations, and supervised the 

26 employees of the Luca Managers and Luca Funds, as well as Luca Operation. Yang is a Chinese 

27 citizen and pennanent resident of the United States. During sworn testimony before the staff of the 

28 Commission in the investigation preceding the filing of this case, Yang asserted her Fifth 

COMPLAINT 4 

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Amendment privilege against self-incrimination in response to questions about her involvement 

2 with each Luca entity. 

3 13. Lei ("Lily") Lei, age 34 of Monterey Park, California, is the former Vice President 

4 of Business Development of Luca International Group, LLC. Other than Yang, Lei was the 

5 principal salesperson responsible for selling interests in the Luca Funds. Lei is a Chinese citizen 

6 and pennanent United States resident. During sworn testimony before the staff of the Commission 

7 in the investigation preceding the fi ling of this case, Lei asserted her Fifth Amendment privilege 

8 against self-incrimination in response to questions about her involvement with any Luca entity. 

9 14. Anthony Pollace, age 79 of Saratoga, California, was the Chief Financial Officer of 

10 Luca International from August 2011 to May 2013. Pollace was previously a financial consultant, 

1 1 chief financial officer and vice president of finance for several small privately-held companies. 

12 15. Luca Managers 

13 (a) Luca International Group, LLC ("Luca International") is a California 

14 limited liability company organized in 2005 with its principal place of business in Fremont, 

15 California. Luca International is owned and controlled by Yang and functioned as an umbrella 

16 organization for all of the Luca Managers and Luca Funds, issuing marketing materials and 

17 advertisements. Luca International is also the Managing General Partner of relief defendant Luca 

18 Barnett Venture, and claims to provide management services including the identification of oil and 

19 gas development prospects in exchange for management fees. 

20 (b) Luca Resources Group, LLC ("Luca Resources") is a Delaware limited 

21 liability company organized in 2011 with its principal place ofbusiness in Houston, Texas. Luca 

22 Resources is owned and controlled by Yang. Luca Resources serves as the manager of relief 

23 defendants Luca Oil, Luca To-Kalon, and Luca Oil II and claims to provide management services 

24 including the identification of oil and gas development prospects in exchange for management fees. 

25 (c) Luca Energy Fund, LLC ("Luca Energy") is a Texas limited liability 

26 company organized in 2010 with its principal place of business in Fremont, California. Luca 

27 Energy is owned and controlled by Yang. Luca Energy serves as the general partner of relief 

28 defendant Luca I and claims to control all of that partnership's day-to-day operations, management 

COMPLAINT 5 

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and actions in exchange for management fees. 

2 16. Y ong ("Michael") Chen, age 51 of Sunnyvale, California, is the principal and 

3 owner of Enthalpy. Chen is a financial aid consultant and tax planner who solicited investors for 

4 Luca Funds through Enthalpy from 2009 to 2013, Chen previously held securities licenses and was 

5 associated with a registered broker-dealer from June 2010 until February 2011, but was never 

6 associated with a registered broker-dealer in connection with his solicitation of investors for the 

7 Luca Funds. In 2012, Chen was fined $5,000 by the Financial Industry Regulatory Authority 

8 ("FINRA") and suspended from associating with any FINRA member for two months for engaging 

9 in unauthorized outside business activity, including his activity through Enthalpy. 

10 17. Entholpy, EMC, Inc. d/b/a Mastermind College Funding ("Enthalpy") is a 

11 California corporation with its principal place ofbusiness in Santa Clara, California that provides 

12 advice on financial planning for college. Enthalpy is owned and controlled by Chen and has never 

13 been registered with the Commission in any capacity. 

14 RELIEF DEFENDANTS 

15 18. The following individuals and entities are named as Relief Defendants in this action 

16 for the purpose of assuring complete relief. Each received investor money or property that was 

17 obtained in violation of the federal securities laws. 

18 19. Luca Operation, LLC ("Luca Operation") is a Louisiana limited liability company 

19 organized in 2011 with principal places of business in Fremont, California and Lafayette, Louisiana. 

20 Luca Operation is owned and controlled by Yang. Luca Operation often held legal title to the oil 

21 and gas interests in which the Luca Funds supposedly invested. Luca Operation also typically 

22 served as the holder of various bank accounts through which investor proceeds, investment receipts, 

23 and expense payments passed. Luca I had a first priority lien upon the assets of Luca Operation, but 

24 Yang pledged those same assets to other purported lenders. 

25 20. Luca Funds: Yang created the Luca Funds purportedly to invest in oil and gas 

26 drilling projects. Although each Luca Fund was established as a separate legal entity, Yang 

27 comingled investor funds among entities without regard for corporate forms. 

28 (a) Luca Barnett Shale Joint Venture ("Luca Barnett Venture") is a California 

COMPLAINT 6 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page6 of 26 



Joint Venture managed by Luca International. Between September 2007 and January 2010, 

2 approximately sixty investors in the United States, some of whom were unaccredited, invested 

3 about $2.4 million in Luca Barnett Venture. 

4 (b) Luca Oil, LLC ("Luca Oil") is a Texas limited liability company managed 

5 by Luca Resources. Luca Oil is the successor entity of Luca Barnett Shale Resources LLC, which 

6 was formed as a Texas limited liability company in August 2008 and managed by Luca Resources. 

7 "Luca Oil" refers to both Luca Barnett Shale Resources LLC and the surviving Luca Oil entity, into 

8 which Luca Barnett Shale Resources LLC was merged in May 2011. From September 2008 to 

9 December 2012, approximately 120 investors in the United States and Japan (including some 

1 o through pooled offshore entities), some of whmn were unaccredited, invested about $41 million in 

11 Luca Oil. 

12 (c) Luca To-Kalon Energy, LLC ("Luca To-Kalon") is a Texas limited liability 

13 company managed by Luca Resources. Between December 2011 and December 2013, 

14 approximately 400 investors in Japan invested about $9 million in Luca To-Kalon through a pooled 

15 offshore entity. 

16 (d) Luca I, LP ("Luca I") is a Louisiana limited partnership managed by Luca 

17 Energy. Between October 2011 and March 2014, approximately twenty investors in China invested 

18 about $8 million in Luca I. The investments were part of an EB-5 immigration visa program, which 

19 provides a method for foreign nationals to obtain a green card by meeting certain investment 

20 requirements. To obtain the visa, investors had to make a qualified minimum $500,000 investment 

21 that would generate at least ten new jobs in the United States. 

22 (e) Luca Oil II, LP ("Luca Oil II") is a Texas General Partnership managed by 

23 Luca Resources. Between December 2012 and January 2014, approximately 100 investors in the 

24 United States, some of whom were unaccredited, invested about $7.9 million in Luca Oil II. 

25 21. J&Q Int'l Trading, Inc. d/b/a J&Q Imports ("J&Q") is a California corporation 

26 with its principal place of business in Monterey Park, California that purports to be in the wholesale 

27 auto business. J&Q and its owner Zhou received approximately $567,000 from Luca Operation to 

28 which they were not entitled. 

COMPLAINT 7 

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22. Skyline Trading LLC ("Skyline") is a Maryland limited liability company with its 

2 principal place ofbusiness in Rockville, Maryland that purports to be in the wholesale trading 

3 business. Shortly after J&Q received $567,000 from Luca Operation, J&Q transferred 

4 approximately $360,000 to Skyline. Around the same time, Skyline purchaseq three luxury 

5 vehicles for approximately $310,000. Approximately $175,000 of the purchase price was paid 

6 directly by Luca Operation, to which Skyline was not entitled. 

7 23. Xiang Long Zhou, age 34, is Lei's spouse. Zhou is a Chinese citizen residing in 

8 Monterey Park, California. Zhou is the owner of J&Q. 

9 

10 

11 

12 

A. 

24. 

FACTS 

Yang, Lei and the Luca Managers Fraudulently Raised Over $68 Million from 
Investors 

From September 2007 to March 2014, Yang, through the Luca Managers, and Lei, 

13 with the help of other defendants, illegally raised $68 million from investors in funds that they 

14 controlled purportedly to purchase interests in oil and gas ventures. Yang and the Luca Managers 

15 targeted many of the investors through Chinese-language television, radio and newspaper 

16 advertisements and investment seminars. Yang, through the Luca Managers, also targeted investors 

1 7 from Japan and China. 

18 25. The investments were structured as an opportunity to earn profits in one of five funds 

19 including relief defendants Luca Barnett Venture, Luca Oil, Luca To-Kalon, Luca I and Luca Oil II. 

20 Yang, through the Luca Managers,,made investment decisions for the Luca Funds and received 

21 compensation from the Luca Funds in return. 

22 26. Yang and Lei led investment seminars in which they represented that prospective 

23 investors could expect annual rates of return of20-30%, monthly distributions, and that their 

24 principal would be returned to them in three to five years. In at least one instance, in connection 

25 with an investment on or about June 28, 2012, Lei even guaranteed 12-15% returns in writing, 

26 stating "we promise a minimum annual return of 12% for the 1st anniversary and 15% for the 2nd 

27 anniversary. We shall be responsible to make up the shortage for you in case you fail to reach the 

28 said return." Emails between Yang and Lei show that they attempted to conceal these guarantees 

COMPLAINT 8 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page8 of 26 



from other employees of Luca Intemational. 

2 27. During investment seminars, Yang, Lei and Luca International misrepresented that 

3 the Luca Funds were profitable, when in reality they were losing millions of dollars from their oil 

4 and gas investments, as described in Section C below. Yang and Luca Intemational paid monthly 

5 revenue distributions to investors that Yang and Lei characterized as purported "retums on 

6 investment." 

7 28. Despite raising $68 million purportedly to fund oil and gas operations, as recently as 

8 March 16,2015, the combined balance of the Luca Managers, Luca Operation and Luca Funds ' 

9 bank accounts was less than $12,000. Although Yang made some oil and gas investments, she 

1 0 misappropriated investor funds for personal purposes, misspent investor funds on a junket for 

11 potential investors, and commingled investor funds among the Luca Funds. Yang returned some of 

12 the monies raised from newer investors to other investors as profits in Ponzi-like fashion. In reality, 

13 Luca Intemational was a failing business and Yang had to raise new funds to keep the company 

14 afloat. 

15 

16 

17 

B. 

29. 

Yang, Through the Luca Managers, Misappropriated and Used Investor Funds 
for Improper Purposes 

Yang exercised her control over the Luca Managers and Luca Funds to 

18 misappropriate millions of dollars of investors' money. Yang and the Luca Managers promised 

19 prospective investors, by way of written offering materials prepared for each of the Luca Funds, that 

20 they would use proceeds to acquire, develop and operate oil and natural gas wells in specific places, 

21 including Texas, Montana, North Dakota, onshore in the Gulf of Mexico and Louisiana. Despite 

22 these promises, Yang, through the Luca Managers, misappropriated investor funds and created 

23 sham transactions to enrich herself, to purchase a home and to allow herself and her family to live a 

24 lavish lifestyle. 

25 

26 30. 

Yang Transferred $1 Million to Herself as Sham "Trademark Licensing Fees" 

In a particularly egregious example of Yang's misappropriation, on or about March 

27 21, 2012, Yang, through Luca Resources as manager for Luca Oil, transferred approximately $1 

28 million from Luca Oil toLuca Intemational, which she characterized in Luca International's books 

COMPLAINT 9 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page9 of 26 



and records as purported trademark licensing fees. On or about March 30, 2012, Yang transferred 

2 $950,000 of the $1 million to her personal bank account. 

3 31. However, in March 2012, Luca International had not registered any trademark logos. 

4 Furthennore, the logos lacked any genuine economic value to the Luca Funds. Rather, the 

5 characterization as trademark licensing fees served only to justify Yang's misappropriation of 

6 investor money. 

7 32. As late as a full year later, in or about March 2013, Yang was still having Luca 

8 International's in-house counsel draft trademark licensing agreements for the Luca Funds. Yang 

9 directed Poll ace to sign the agreements on behalf of the Funds, and Yang backdated some of the 

1 0 agreements by as much as two years. 

11 

12 

13 

Yang Used Investor Funds to Pay Personal Expenses 

33. In or around June 2012, Yang misappropriated an additional approximately $2.4 

million of investor funds. Yang used the funds to purchase a 5,600-square-foot residence in the 

14 Avalon Heights gated community of Fremont, California. 

15 34. On May 30,2012, Yang asked Pollace by email how to borrow $2.5 million from 

16 Luca Operation to purchase a house. Pollace informed Yang that she should not borrow money 

17 from Luca Operation, and Yang told Poll ace to disregard the request. 

18 35. Despite this, on June 4, 2012, Yang transferred $2,463,817 from Luca Operation to 

19 an account held in the name of Sansun Technology Ltd. ("Sansun"), a Chinese company controlled 

20 by her brother. A few days later, on June 7 and 8, 2012, Sansun wired $2,431,950 to an escrow 

21 company that Yang had arranged to handle the purchase ofher house. To cover up her 

22 misappropriation ofthe $2.4 million, Yang falsely described in a June 4, 2012 email toLuca 

23 International's bookkeeper, and again in a June 5, 2012 "letter of intent" addressed to Yang' s sister-

24 in-law at Sansun, that the wire transfer to Sansun was for the purpose of making a deposit on an oil 

25 drilling rig in China. 

26 36. Yang misappropriated an additional $2 million of investor funds for a variety of 

27 personal expenses, but arranged to record these items on Luca International ' s books as a "loan to 

28 owner." Thus, in May 2011, Yang transferred $30,000 from Luca International's account to her 

COMPLAINT 10 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page10 of 26 



personal bank account to pay for her 2010 personal taxes. In April20I2, Yang paid the United 

2 States Treasury approximately $20,000 from Luca International's account for her 20II personal 

3 taxes. 

4 37. In 20I2, Yang, through Luca Resources, used Luca Oil funds to pay for her children 

5 and a relative to travel to China and for the same relative's travel on three additional occasions, 

6 including a trip to Hawaii. In 20 II , Yang, through Luca International, used Luca Barnett Venture 

7 funds to pay for the travel ofher children, brother and sister-in-law. Additionally, in June 20I2 

8 Yang used money from the Luca Oil and Luca International accounts to pay for a family vacation to 

9 Hawaii. Yang also used Luca International's account to pay for pool and gardening services and 

10 her homeowner's association dues from August 2012 through December 2014. 

11 38. By early 20I2, Yang was specifically advised by the CFO, Pollace, that she should 

12 discontinue paying for personal expenses out of corporate accounts. Even after the specific 

13 admonition, Yang continued to misuse investor money by using corporate accounts to pay personal 

14 expenses, including in 2012, private school contlibutions, in 2012 and 2013, martial arts, choir and 

15 music lessons for her children, and through 2014, the gardener, pool service and homeowner's 

16 association dues. 

17 

18 39. 

Yang, Through the Luca Managers, Misused Investor Funds for a Marketing Junket 

The Luca Funds' offering materials which were issued by Yang through the Luca 

19 Managers, stated that investor money would be used for acquiring, developing and operating oil and 

20 natural gas wells, to pay legal expenses associated with the offerings, and to pay salaries associated 

21 with acquiring, developing and operating oil and gas investments in the United States. In addition 

22 to misappropriating investor funds for personal purposes, Yang, through the Luca Managers, also 

23 spent investor funds for undisclosed purposes that were inconsistent with the uses of funds 

24 described in the offering materials. For example, Yang used approximately $510,000 of investor 

25 funds to pay for a so-called "U.S. China Energy Summit," which was a 1 0-day, expenses-paid golf 

26 junket to Pebble Beach, California for potential investors from China in September 2012. Costs for 

27 the Summit included a $200,000 speaking fee for a fonner President of the United States and lavish 

28 dinners. 

COMPLAINT 11 

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1 40. Personal expenses and marketing junkets were not appropriate uses of investor funds 

2 under any of the Luca Funds' private placement memoranda. 

3 

4 

5 

6 

c. 

41. 

Yang, Lei and The Luca Managers Made False and Misleading Claims to Lure 
and Deceive Investors 

Yang, Lei and Luca International Made False and Misleading Statements Regarding 
Projected Returns and Risks 

From approximately September 2008 to January 2014, Yang, Lei and Luca 

7 International used false and misleading statements projecting rates of return on investment that were 

8 unfounded and contrary to actual operations in pitches to potential investors. For instance, a Luca 

9 Oil brochure Yang and Lei used to solicit investors contained statements regarding "estimated 20-

10 30% annual returns" and charts of"estimated income" showing cumulative returns of 407.29% over 

11 twenty years. 

12 42. In addition, a Luca Oil II brochure that Yang and Lei used to solicit investors from 

13 approximately December 2012 through January 2014 represented a "payback period" of"estimated 

14 4 years," a ten-year total return of"2.6 times," and a ten-year internal rate of return of"23%." Lei 

15 also cited false historical returns, telling at least one prospective investor in writing that the Luca 

16 Funds' returns have "always [been] between 15% to 20% annually." 

17 43. Compounding these extreme and unfounded claims regarding returns, during the 

18 spring of 2011, Yang solicited investments from Japanese investors using brochures and 

19 PowerPoints which falsely claimed there was "zero risk of losing entire principal" and that there 

20 was a "predictable return." Lei made similar representations to prospective Chinese-American 

21 investors, one of whom emailed Lei and stated, "We are very interested in your project since you 

22 told me that there is 0% risk to join [it] and I trust you since we are all Chinese!" 

23 44. Yang also represented that the monthly distributions for Luca Oil and Luca To-

24 Kalon would eventually increase to 2% of the principal invested. 

25 45. Yang and Lei knew or were reckless in not knowing that the representations in the 

26 PowerPoints, brochures and other offering documents about both returns and risks were materially 

27 false and misleading. The estimated returns were not based on actual well results, but were based 

28 on unrealistic and unattainable assumptions. 

COMPLAINT 12 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page12 of 26 



1 46. First, those projections assumed that every well would be 100% successful, when in 

2 reality the Vice President of Exploration told Yang at least as early as January 2012 that most of the 

3 wells had a likelihood of success of less than 60%. 

4 47. Second, the forecasts assumed that all wells would be drilled and producing in the 

5 first year, even though the Vice President of Exploration told Yang it would take longer to identify 

6 well sites, negotiate leases, and commence drilling and production. Yang was told by employees 

7 that the estimated returns were inaccurate, but she failed to lower them. 

8 48. Yang, Lei and Pollace were aware that the wells were not perfonning as well as 

9 projected. In at least one instance on or about March 1, 2012, Lei advised Yang about how to 

1 0 conceal this infonnation from new investors by delaying access to certain perfonnance infonnation 

11 for at least six months. On or about January 29, 2013, Pollace commented toLuca International's 

12 Vice President of Production that it appeared the Luca Funds were "in some bad properties." 

13 49. 

14 presentations. 

15 

16 

17 50. 

Yang had final editorial control over these marketing brochures and PowerPoint 

Yang, Lei, and the Luca Managers Made False and Misleading Statements 
Regarding the Luca Funds ' Actual Profitability 

From at least April2009 through January 2014, Yang, through Luca International, 

18 distributed monthly reports to investors in certain of the Luca Funds, purporting to detail the oil and 

19 gas production for each operating well and the gross oil and gas revenues received by the Luca 

20 Funds for the month. Yang also approved, and Luca International enclosed with each report, a 

21 payment purportedly representing the investor's pro rata net distribution- i.e., the supposed net 

22 profits. Several existing investors invested more money.after receiving these monthly reports. 

23 51. The monthly reports were materially false and misleading because the reports 

24 omitted any operating expenses incurred by the Funds. In reality, the costs of running the oil and 

25 gas drilling operations far exceeded the proceeds from the sales of oil and gas from the inception of 

26 the Luca Funds. Yang knew the distribution numbers on the reports and the monthly payments did 

27 not represent the profits of the business, because she comingled and used whatever money was 

28 available, including from operations and new money raised from investors in the Luca Funds, to 

COMPLAINT 13 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page13 of 26 



1 make monthly payments to previous investors and to pay for operating and overhead expenses for 

2 the Luca Managers and Luca Funds. Pollace was aware that the Luca Funds were not properly 

3 accounting for their expenses and that Yang was comingling investor money. 

4 52. A PowerPoint slide with a sample month's oil and gas revenue distributions was 

5 shown to investors to provide the false impression that the Fund was making a positive net 

6 distribution. 

7 53. Yang had final editorial control over the PowerPoint slide and monthly reports to 

8 investors about the status of their investments. 

9 Yang, Through the Luca Managers, Made False and Misleading Statements 
Regarding Well Reserves 

10 

11 54. In addition to the false and misleading representations about profitability, Yang also 

12 knowing! y made false and misleading statements to investors about the amount of oil and gas 

13 reserves in Luca's well prospects to lure investors to invest. 

14 55. The marketing brochures and monthly reports that Yang approved and distributed to 

15 investors misrepresented that the well prospects contained millions ofbarrels in oil reserves and 

16 billions of cubic feet in gas reserves. However, the tetm "reserves" is a term of art that requires a 

17 petroleum engineer to certify that a well's petroleum quality meets certain criteria. Only three of 

18 the Luca Funds' twenty oil and gas wells had reports estimating reserves. The remaining "reserve" 

19 numbers were picked out of thin air. Yang was told by Luca International's former Vice President 

20 of Production numerous times from April through November 2012 that use of the term "reserves" 

21 was misleading and inaccurate, but Yang continued to use the tenn "reserves" improperly in 

22 monthly investor reports through January 2014. As discussed above, several prospective and 

23 existing investors invested or invested rnore money after receiving these marketing brochures and 

24 monthly reports. 

25 

26 

27 56. 

Yang and Luca Energy Falsely Promised the EB-5 Investors that Their Money 
Would Be Used to Make a Secured Loan 

From in or about October 2011 through March 2014, Yang, through Luca Energy, 

28 and Lei used the ~uca I offering to target Chinese citizens who desired to obtain pennanent 

COMPLAINT 14 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page14 of 26 



1 

2 

3 

residence in the United States through the EB-5 Visa Program. 

57. Defendants Yang and Luca Energy recruited EB-5 investors through investment 

seminars in China, some of which Pollace attended. Lei also recruited EB-5 investors. They each 

4 distributed brochures or presented PowerPoints that contained projected rates of return that were 

5 unfounded and inconsistent with the actual perfmmance ofLuca' s earliest funds, Luca Barnett 

6 Venture and Luca Oil. 

7 58. Yang, through Luca Energy, and Lei represented that Luca I offered an investment 

8 opportunity to acquire EB-5 visas. The Luca I private placement memorandum represented that all 

9 of the investor proceeds, which ultimately totaled approximately $8 million, would be used to make 

10 a loan to Luca Operation and that this loan would finance development costs for eight oil and gas 

11 drilling projects. Luca Operation granted Luca I a security interest in Luca Operation's assets to 

12 assure repayment of the loan in five years. The loan and security agreement were signed by Yang 

13 as CEO ofboth Luca Operation and Luca I. 

14 59. Yang, Lei and Luca Energy failed to tell Luca I's investors that Luca Operation at 

15 the time of the agreement was already hopelessly in debt due to overdue accounts payable and 

16 lacked the cash to pay. 

17 60. In August 2013, while Yang, Lei and Luca Energy continued to raise money from 

18 new investors, the total amount of Luca Operation' s accounts payable had grown to more than $11 

19 million, most of which was more than ninety days delinquent, seriously undennining Luca 

20 Operation' s ability to repay the loan from Luca I. Yang, Lei and Luca Energy did not disclose this 

21 fact to prospective investors in Luca I. 

22 61 . Also in August 2013, Yang further compounded the problem by bmTowing 

23 approximately $12 million from a lender in Hong Kong at an interest rate of approximately 30%, 

24 and by making Luca Operation the guarantor of that loan' s repayment. 

25 

26 

D. 

62. 

The Luca Funds' Unregistered Securities Offerings 

Luca International, Yang and Lei offered and sold unregistered securities through 

27 investment seminars in Luca International ' s offices and hotel conference rooms in California and in 

28 China. Pollace offered to sell unregistered securities by distributing Luca International's marketing 

COMPLAINT 15 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page15 of 26 



2 

3 

4 

5 

6 

7 

8 

9 

materials primarily to institutional investors in the U.S. Pollace knew the Luca Funds ' wells were 

perfonning poorly when he met with and solicited institutional investors because he received 

infonnation about low production of oil and gas from Luca Intemational ' s fonner Vice President of 

Production. 

63 . Chen is a financial aid consultant and tax planner who solicited investors for Luca 

Intemational through his wholly-owned business Enthalpy, which is not a registered broker-dealer. 

Chen was previously associated with a registered broker-dealer, but not in connection with his 

solicitation of investors for the Luca Funds. 

64. Chen conducted seminars at which he recommended investing in the Luca Funds for 

1 0 their tax deductibility, as a method for investors to lower adjusted gross income in order to qualify 

11 for college financial aid. His presentations incorporated Luca Intemational ' s charts showing 

12 projected retums that were materially misleading, as described above. 

13 65. Lei and Chen were two of the Luca Funds' most successful fundraisers, eaming 

14 hundreds of thousands of dollars in commissions for recruiting investors for Luca, which typically 

15 represented between 6% and 11% of the amount invested. Lei received approximately $436,000 

16 and Chen received approximately $770,000 in transaction-based compensation. Yang used other 

17 persons to raise money from investors in Japan. 

18 66. Yang did not file registration statements with the. Commission for the offer or sale of 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

any of the Luca Fund securities. Luca Bamett Venture and Luca I filed Securities Act Forms D 

claiming exemptions from registration pursuant to Securities Act Rule 506. Luca Oil filed a 

Securities Act Form D claiming exemptions from registration pursuant to Securities Act Rules 505 

and 506. Neither exemption applied to the Luca Funds ' securities offerings because Yang, through 

Luca Intemational and Luca Energy, used general solicitation in newspaper, television and radio 

advertisements to market the securities and invite the general public to investment seminars. 

67. Numerous investors in several of the Luca Funds were non-accredited, but the Luca 

Managers and Luca Funds never prepared or provided the required financial disclosure documents 

or audited financial statements to non-accredited investors. 

68. In fact , Yang and Lei told certain investors to indicate on the questionnaires that they 

COMPLAINT 16 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page16 of 26 



were accredited when they were not. 

2 E. The Luca Funds and Luca Managers Are On the Verge of Collapse 

3 69. In April 2014, Yang ceased making monthly payments to investors in the Luca 

4 Funds. Instead Yang proposed to convert their interests into equity investments in a holding 

5 company known as Sinotex, claiming the company would become publicly traded. 

6 70. In July 2014, Yang sold for $8.5 million the well interests in a project called "Bull 

7 Moose" that was generating the highest levels of oil and gas production for the Luca Funds. At the 

8 time of this sale, Luca Operation was the legal owner of the Bull Moose interests and according to 

9 representations in the Luca I private placement memorandum and the provisions of the loan and 

10 security agreement dated March 2, 2012, Luca I therefore had a security interest in the Bull Moose 

11 holdings. None of the Bull Moose sale proceeds were used to pay Luca Funds' investors, as a 

12 whole, or to repay the Luca I loan that was secured by the Bull Moose interest. 

13 71. Instead, Yang used the $8.5 million in proceeds from the sale of the Bull Moose well 

14 to pay past due expenses for drilling operations, to pay debts to foreign lenders, to pay some 

15 investors who had sued Yang and Luca International, and to transfer money to the Luca Managers. 

16 Yang also transferred approximately $567,000 to an account in the name of relief defendant J&Q, 

17 an entity owned by Lei's husband, relief defendant Zhou, between July 28 and August 18, 2014. 

18 J &Q transferred approximately $3 57,000 to relief defendant Skyline between July 24 and 

19 September 30, 2014. Skyline purchased three luxury vehicles for about $310,000 between August 

20 11 and 13, 2014. Approximately $175,000 of the purchase price for the vehicles was paid directly 

21 by Luca Operation. Relief defendants Zhou, J&Q and Skyline did not perform any services for 

22 Luca that would have entitled them to compensation. 

23 72. Since the fall of2014, Luca has been receiving only minimal amounts of revenue 

24 from the sale of oil and gas. Some investors have attempted, without success, to redeem their 

25 investments in the Luca Funds. 

26 

27 

28 

COMPLAINT 17 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page17 of 26 



1 

2 

3 

4 

5 

73. 

74. 

FIRST CLAIM FOR RELIEF 

(Violations of Section lO(b) of the Exchange Act and Rule lOb-5 by 
Yang, Lei, Luca International, Luca Resources and Luca Energy) 

(Securities Fraud) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

Defendants Yang, Lei, Luca International, Luca Resources, and Luca Energy, by 

6 engaging in the conduct set forth above, directly or indirectly, by use of means or instrumentalities 

7 of interstate commerce, or of the mails, or of a facility of a national security exchange, with 

8 scienter; employed devices, schemes, or miifices to defraud; and engaged in acts, practices, or 

9 courses of business which operated or would operate as a fraud or deceit upon other persons, in 

10 connection with the purchase or sale of securities, in violation of Section 1 O(b) of the Exchange Act 

11 [15 U.S.C. § 78j(b)] and Rule 10b-5(a) and (c) thereunder [17 C.F.R. §§ 240.10b-5(a) and (c)], and 

12 unless restrained and enjoined will continue to violate these provisions. 

13 75. Defendants Yang, Lei, and Luca International, by engaging in the conduct set forth 

14 above, directly or indirectly, by use of means or instrumentalities of interstate commerce, or of the 

15 mails, or of a facility of a national security exchange, with scienter made untrue statements of 

16 material fact or omitted to state material facts necessary in order to make the statements made, in 

17 light of the circumstances under which they were made, not misleading, in violation of Section 

18 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. §§ 

19 240.1 Ob-5(b )], and unless restrained and enjoined will continue to violate these provisions. 

20 

21 

22 

23 

24 

76. 

77. 

SECOND CLAIM FOR RELIEF 

(Violations of Sections 17(a) of the Securities Act by 
Yang, Lei, Luca International, Luca Resources and Luca Energy) 

(Securities Fraud) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

Defendants Yang, Lei, Luca International, Luca Resources, and Lpca Energy, have, 

25 by engaging in the conduct set forth above, directly or indirectly, in the offer or sale of securities, by 

26 the use of means or instruments of transportation or communication in interstate commerce, or of 

27 the mails: (1) with scienter, employed devices, schemes, or artifices to defraud; (2) obtained money 

28 or property by means of untrue statements of material fact or by omitting to state material facts 

COMPLAINT 18 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page18 of 26 



necessary in order to make statements made, in the light of the circumstances under which they 

2 were made, not misleading; and (3) engaged in transactions, practices, or courses of business which 

3 operated or would operate as a fraud or deceit upon the purchasers of such securities. 

4 78. By reason of the foregoing, Defendants Yang, Lei, Luca International, Luca 

5 Resources, and Luca Energy, have directly or indirectly violated Section 17(a) of the Securities Act 

6 [15 U.S.C. § 77q(a)], and unless restrained and enjoined will continue to violate these provisions. 

7 THIRD CLAIM FOR RELIEF 

8 (Violations of Section 17(a)(3) of the Securities Act by Pollace) 

9 

10 

11 

79. 

80. 

(Securities Fraud) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

Defendant Pollace, has, by engaging in the conduct set forth above, directly or 

12 indirectly, in the offer or sale of securities, by the use of means or instruments of transportation or 

13 communication in interstate commerce, or of the mails, engaged in transactions, practices, or 

14 courses ofbusiness which operated or would operate as a fraud or deceit upon the purchasers of 

15 such securities. 

16 81. By reason of the foregoing, Defendant Pollace has directly or indirectly violated 

17 Section 17(a)(3) ofthe Securities Act [15 U.S.C. § 77q(a)(3)], and unless restrained and enjoined 

18 will continue to violate this provision. 

19 

20 

21 

22 

23 

82. 

83. 

FOURTH CLAIM FOR RELIEF 

(Violations of Sections· 5( a) and (c) of the Securities Act by 
Yang, Lei and Luca International) 
(Unregistered Securities Offering) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

Defendants Yang, Lei, and Luca International, by engaging in the conduct described 

24 above, directly or indirectly, made use of means or instruments or transportation or communication 

25 in interstate commerce or of the mails, to offer to sell or to sell securities, or to carry or cause such 

26 securities to be carried through the mails or in interstate commerce for the purpose of sale or for 

27 delivery after sale. 

28 84. No registration statement has been filed with the SEC or has been in effect with 

COMPLAINT 19 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page19 of 26 



respect to any of the offerings or securities alleged herein, and no exemption from registration 

2 applies. 

3 85. By reason of the foregoing, Defendants Yang, Lei, and Luca International Group 

4 have violated Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)], and 

5 unless restrained and enjoined will continue to violate these provisions. 

6 FIFTH CLAIM FOR RELIEF 

7 (Violations of Section S(c) of the Securities Act by Pollace) 

8 

9 

10 

86. 

87. 

(Unregistered Securities Offering) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

Defendant Pollace, by engaging in the conduct described above, directly or 

11 indirectly, made use of means or instruments or transportation or communication in interstate 

12 commerce or of the mails, to offer to sell securities, or to carry or cause such securities to be carried 

13 through the mails or in interstate commerce for the purpose of sale or for delivery after sale. 

14 88. No registration statement has been filed with the SEC or has been in effect with 

15 respect to any of the offerings or securities alleged herein, and no exemption from registration 

16 applies. 

17 89. By reason of the foregoing, Defendant Pollace has violated Section 5(c) of the 

18 Securities Act [15 U.S.C. § 77e(c)], and unless restrained and enjoined will continue to violate this 

19 provisiOn. 

20 

21 

22 

23 

24 

90. 

91. 

SIXTH CLAIM FOR RELIEF 

(Violations of Sections 206(1) and 206(2) of the Advisers Act by 
Yang, Luca International, Luca Resources and Luca Energy) 

(Investment Adviser Fraud) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

At all relevant times, Defendants Yang, Luca International, Luca Resources, and 

25 Luca Energy were "investment advisers" within the meaning of Section 202(a)(11) of the Advisers 

26 Act [15 U.S.C. § 80b-2(a)(l1)]. Defendants Yang, Luca International, Luca Resources, and Luca 

27 Energy each were in the business of providing investment advice concerning securities for 

28 compensation. Defendant Yang was also an investment adviser due to her ownership, management 

COMPLAINT 20 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page20 of 261 and control of Defendants Luca International, Luca Resources, and Luca Energy. 

2 92. As set forth above, Defendants Yang, Luca International, Luca Resources, and Luca 

3 Energy defrauded their clients, the Luca Funds, by misappropriating money from their advisory 

4 clients and engaging in self-dealing with their clients through a scheme to defraud and through 

5 transactions, practices, and courses ofbusiness which operated as a fraud or deceit upon their 

6 advisory clients. 

7 93. Defendants Yang, Luca International, Luca Resources, and Luca Energy, by use of 

8 the mails or any means or instrumentality of interstate commerce, directly or indirectly, acting 

9 intentionally, knowingly or recklessly: (a) have employed or are employing devices, schemes, or 

10 artifices to defraud clients and/or potential clients; or (b) have engaged or are engaging in 

11 transactions, practices, or courses ofbusiness which operate as a fraud or deceit upon a client or 

12 prospective client. 

13 94. As a result, Defendants Yang, Luca International, Luca Resources, and Luca Energy 

14 have violated Sections 206(1) and (2) of the Advisers Act [15 U.S.C. § 80b-6(1) and (2)], and 

15 unless restrained and enjoined will continue to violate these provisions. 

16 

17 

18 

19 

20 

95. 

96. 

SEVENTH CLAIM FOR RELIEF 

(Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 by 
Yang, Luca International, Luca Resources and Luca Energy) 

(Investment Adviser Fraud) 

Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

At all times relevant to this Complaint, Defendants Yang, Luca International, Luca 

21 Resources, and Luca Energy acted as investment advisers to the Luca Funds, pooled investment 

22 vehicles as defined in Rule 206(4)-8(b) [17 C.F.R. § 275.206(4)-8(b)]. 

23 97. Defendants Yang, Luca International, Luca Resources, and Luca Energy, while 

24 acting as investment advisers to pooled investment vehicles, by use of the mails, and the means and 

25 instrumentalities of interstate commerce, directly or indirectly, engaged in acts, practices, or courses 

26 of businesses which were fraudulent, deceptive or manipulative. Defendants Yang, Luca 

27 International, Luca Resources, and Luca Energy made untrue statements of a material fact or 

28 omitted to state a material fact necessary to make the statements made, in the light of the 

COMPLAINT 21 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page21 of 26 



1 circumstances under which they were made, not misleading, to investors or prospective investors in 

2 the pooled investment vehicles, and otherwise engaged in acts, practices, or courses of businesses 

3 that were fraudulent, deceptive or manipulative with respect to investors or prospective investors in 

4 the pooled investment vehicles. 

5 98. By engaging in the conduct described above, Defendants Yang, Luca International, 

6 Luca Resources, and Luca Energy have violated Section 206(4) of the Advisers Act [15 U.S.C. § 

7 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8], and unless restrained and 

8 enjoined will continue to violate these provisions. 

9 EIGHTH CLAIM FOR RELIEF 

10 (Violations of Section lS(a) of the Exchange Act by Lei, Chen and Entholpy) 
(Unregistered Broker-Dealers) 

11 

12 99. Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

13 100. Defendants Lei, Chen and Enthalpy, directly or indirectly, through use of the means 

14 or instruments of transportation or communication in interstate commerce or the mails, acted as a 

15 broker and/or effected transactions in, and induced or attempted to induce the purchase or sale of, 

16 securities (other than an exempted security or commercial paper, bankers' acceptances or 

17 commercial bills) without being registered with the Commission in accordance with Section 15(b) 

18 of the Exchange Act [15 U.S.C. § 78o(b)]. 

19 101. By reason of the foregoing, defendants Lei, Chen and Enthalpy violated Section 

20 15(a) of the Exchange Act [15 U.S.C. § 78o(a)], and unless restrained and enjoined will continue to 

21 violate this provision. 

22 NINTH CLAIM FOR RELIEF 

23 (Relief Defendants) 

24 102. Paragraph numbers 1 through 72 are re-alleged and incorporated herein by reference. 

25 103. ReliefDefendants Luca Operation and the Luca Funds received and may continue to 

26 hold investor funds that were obtained through violations of the federal securities laws, as alleged 

27 above. 

28 104. As set fmih above, in or around July and August 2014, Yang transferred 

COMPLAINT 22 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page22 of 26 



approximately $567,000 to the accounts of Relief Defendant Zhou and his company Relief 

2 Defendant J&Q. 

3 105. Shortly after receiving the funds, J&Q transferred approximately $360,000 to Relief 

4 Defendant Skyline. Around the same time Skyline purchased three luxury vehicles for 

5 approximately $310,000. Approximately $175,000 of the purchase price for the vehicles was paid 

6 directly by Luca Operation. 

7 106. Defendant Yang has transferred to Relief Defendants Zhou and J &Q money derived 

8 from the Defendants' violations described in this Complaint, to which Relief Defendants Zhou and 

9 J&Q have no legitimate claim. 

10 107. Defendant Yang and Relief Defendant J&Q have transferred to Relief Defendant 

11 Skyline money derived from the Defendants' violations described in this Complaint, to which 

12 ReliefDefendant Skyline has no legitimate claim. 

13 PRAYER FOR RELIEF 

14 WHEREFORE, the Commission respectfully requests that the Court: 

15 I. 

16 Enjoin Defendants Luca International, Luca Resources, Luca Energy, Yang and Lei, 

17 preliminarily and permanently from directly or indirectly violating Section 17(a) of the Securities 

18 Act [15 U.S.C. § 77q(a)], and Section 10(b) ofthe Exchange Act [15 U.S.C. § 78j(b)], and Rule 

19 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Defendant Pollace pennanently from directly or 

20 indirectly violating Section 17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)]. 

21 II. 

22 Enjoin Defendants Luca International, Yang and Lei, preliminarily and permanently from 

23 directly or indirectly violating Sections 5(a) and (c) of the Securities Act [15 U.S.C. §§ 77e(a) and 

24 77e(c)], and Defendant Pollace permanently from directly or indirectly violating Section 5(c) of the 

25 Securities Act [15 U.S.C. § 77e(c)]. 

26 III. 

27 Enjoin Defendants Luca International, Luca Resources, Luca Energy, and Yang, 

28 preliminarily and permanently from directly or indirectly violating Sections 206(1 ), 206(2) and 

COMPLAINT 23 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page23 of 26 



1 206(4) ofthe Advisers Act [15 U.S.C. §§ 80b-6(1), 80b-6(2), and 80b-6(4)] and Rule 206(4)-8 

2 thereunder [17 C.F.R. § 275.206(4)-8]. 

3 IV. 

4 Enjoin Defendants Lei, Chen and Entholpy pennanently from directly or indirectly violating 

5 Section 15(a) ofthe Exchange Act [15 U.S.C. § 78o(a)]. 

6 V. 

7 Enter an Order preliminarily and pennanently enjoining Defendants Luca International, 

8 Luca Resources, Luca Energy, Yang and Lei from directly or indirectly participating in the 

9 issuance, offer, or sale of any security of any entity controlled by, or under joint control with, any of 

10 them, including but not limited to securities issued by Sinotex, as well as the acceptance of any 

11 money or anything of value by any Defendant for such securities. 

12 VI. 

13 Enter an Order preliminarily and permanently enjoining Defendants Luca International, 

14 · Luca Resources, Luca Energy, Yang and Lei from directly or indirectly soliciting any person or 

15 entity to purchase or sell any security. 

16 VII. 

17 Enter an Order appointing a receiver over Defendants Luca International, Luca Resources, 

18 Luca Energy, and ReliefDefendants Luca Operation and the Luca Funds to stop the fraud, marshal 

19 and preserve all remaining assets, clarify the entities' financial affairs, and investigate claims 

20 against Yang, Lei and other persons. 

21 VIII. 

22 Enter an Order freezing the assets pending final judgment of Defendants Luca International, 

23 Luca Resources, Luca Energy, Yang, Lei, and of Relief Defendants Luca Operation, the Luca 

24 Funds, J&Q, Skyline, and Zhou in specified assets or accounts obtained through the violations 

25 alleged herein, including the requirement that these Defendants and Relief Defendants repatriate all 

26 funds obtained through the violations that were sent to, or deposited into, any offshore accounts. 

27 IX. 

28 Enter an Order prohibiting Defendants Luca International, Luca Resources, Luca Energy, 

COMPLAINT 24 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page24 of 26 



Yang, Lei, and the ReliefDefendants from destroying documents and pennitting expedited 

2 discovery; and requiring accountings from Defendants Luca International, Luca Resources, and 

3 Luca Energy. 

4 X. 

5 Enter an order barring Defendant Yang from serving as an officer or director of a public 

6 company pursuant to Section 20(e) ofthe Securities Act [15 § U.S.C. 77t(e)] and Section 21(d)(2) 

7 of the Exchange Act [15 U.S.C. § 78u(d)(2)]. 

8 XI. 

9 Enter an Order requiring Defendants Luca International, Luca Resources, Luca Energy, 

10 Yang, Lei, Chen, Enthalpy and the ReliefDefendants to disgorge their ill-gotten gains according to 

11 proof, plus prejudgment interest thereon. 

12 XII. 

13 Enter an Order requiring Defendants Luca International, Luca Resources, Luca Energy, 

14 Yang, Lei, Pollace, Chen and Enthalpy to pay civil penalties pursuant to Section 20(d) of the 

15 Securities Act [15 U.S.C. § 77t(d)] and Section 21(d) ofthe Exchange Act [15 U.S.C. § 78u(d)]. 

16 XIII. 

17 Retain jurisdiction of this action in accordance with the principles of equity and the Federal 

18 Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that 

19 may be entered, or to entertain any suitable application or motion for additional relief within the 

20 jurisdiction of this Court. 

21 

22 

23 

24 

25 

26 

27 

28 

COMPLAINT 25 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page25 of 26 



XIV. 

2 Grant such other and further relief as this Court may detennine to be just, equitable, and 

3 necessary. 

4 

5 Dated: July _f, 2015 Respectfully submitted, 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

COMPLAINT 26 

   Case3:15-cv-03101 Document1 Filed07/06/15 Page26 of 26