UNITED STATES OF AMERICA

Before the

SECURITIESAND EXCHANGE COMMISSION

SECURITIES ACT OF1933

Release No. 10960 / August 4, 2021

SECURITIES EXCHANGE ACT OF 1934

Release No. 92564 / August 4, 2021

INVESTMENT ADVISERS ACTOF 1940

Release No. 5817 / August 4, 2021

INVESTMENT COMPANYACT OF 1940

Release No. 34349 / August 4, 2021

ADMINISTRATIVEPROCEEDING

File No. 3-20452

In the Matterof

WENDAN BAO, SHUO GU,

LENDINGCAR CORP., AND

H7 CREDITLLC,

Respondents.

ORDER INSTITUTING ADMINISTRATIVE

AND CEASE-AND-DESIST PROCEEDINGS,

PURSUANT TO SECTION 8A OF THE

SECURITIES ACT OF 1933, SECTION 21C

OF THE SECURITIES EXCHANGE ACT

OF 1934, SECTIONS 203(f) AND 203(k) OF

THEINVESTMENT ADVISERS ACT OF

1940, AND SECTION 9(b) OF THE

INVESTMENT COMPANY ACT OF 1940,

MAKING FINDINGS, AND IMPOSING

REMEDIALSANCTIONSAND A CEASEAND-DESIST ORDER

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the

public interest that public administrative and cease-and-desist proceedings be, and hereby are,

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Section 21C of

the Securities Exchange Act of 1934 (“Exchange Act”),Sections 203(f) and 203(k) of the

Investment Advisers Act of 1940 (“Advisers Act”), and Sections 9(b) of the Investment Company

Act of 1940 (“Investment Company Act”) against Wendan Bao, Shuo Gu, LendingCar

Corporation, and H7 Credit LLC (collectively, the “Respondents”).
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II.

In anticipation of the institution of these proceedings, Respondents have submitted Offers

of Settlement (the “Offers”)which the Commission has determined to accept. Solely for the

purpose of these proceedings and any other proceedings brought by or on behalf of the

Commission, or to which the Commission is a party, and without admitting or denying the findings

herein, except as to the Commission’s jurisdiction over Respondents and the subject matter of

these proceedings, which are admitted, and except as provided herein in Section V, Respondents

consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings

Pursuant to Section 8A of the Securities Act of 1933, Sections 15(b) and 21C of the Securities

Exchange Act of 1934, Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, and

Section 9(b) of the Investment Company Act Of 1940, Making Findings, and Imposing Remedial

Sanctions and a Cease-And-DesistOrder(“Order”),as setforth below.

III.

On the basis of this Order and Respondents’ Offers,the Commission finds1that:

Summary

1. This matter involves the misappropriation of assets by Wendan Bao and Shuo Gu,

Chinese nationals resident in the United States,in connection with a private securities offering.

Starting in May 2018, Bao and Gu, who were domestic partners at that time and later married,

sought to raise investor monies through the DeYao Fund, LP (“DeYao Fund” or the “Fund”), a 

pooled investment vehicle set up tofund dealer floor plan loans to automobile dealerships in order to 

finance the purchase of used car inventory. Bao and Gu, who primarily solicited investors of Asian 

and Asian-American origin, made misrepresentations to investors regarding the manner in which 

their money would be used and the safeguards in place to prevent misuse.

2. From November 2018 through February 2019, the DeYao Fund raised capital

contributions of at least $450,000 from investors. Based on representations made to investors, the

capital should have been transferred from the DeYao Fund to H7 Credit LLC, an entity controlled

by Bao and Gu, for the purpose of originating loans to automobile dealerships. However,upon H7

Credit LLC’s receipt of the DeYao Fund’s assets, Bao and Gu diverted the money to unauthorized

uses. Among other things, Baoand Gu used the money to pay offtheir unrelated business debts.

3. As a result of such conduct, Bao and Gu, acting directly and through entities under

their control, violated the antifraud provisions of the federalsecurities laws.

1 The findings herein are made pursua nt to Respond ents’ Offers of Settlem e nt and are not binding on any

otherpersonorentityin this orany otherproceeding.
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Respondents

4. Wendan Bao (a/k/a Loui Gu), age 40, was a resident of California during the

relevant period and currently residesin Oklahoma. He is a citizen of China. Bao is a co-founder of

the DeYaoFund. He is also the founder, owner and CEO of H7 Credit LLC and LendingCar

Corporation. Bao has never been registeredwith the Commission in any capacity.

5. Shuo Gu (a/k/a Blair Gu), age 29, was a resident of California during the relevant

period and currently residesin Oklahoma. She is a citizen of China. Gu is a co-founder of the

DeYaoFund. She is also a managing member of H7 Credit LLC and LendingCar Corporation. Gu

has never beenregistered with the Commission in any capacity.

6. LendingCar Corporation (“LendingCar”) is a California corporation, with its

principal place of business in San Mateo,California. LendingCar, which was controlled by Bao

and Gu, was the general partner of the DeYao Fund and acted as its investment adviser. Neither 

LendingCar nor its securities have ever been registered with the Commission in any capacity.

7. H7 CreditLLC (“H7Credit”) is a California limited liability company, with its

principal place of business in San Mateo, California. H7 Credit, which was controlled by Bao 

and Gu, was intended to serve asthe originator for dealerfloor plan loans using money invested

in the DeYao Fund. Neither H7 Credit nor its securities have ever been registered with the 

Commission in any capacity.

OtherRelevant Entities

8. De Yao Fund, LP is a Delaware limited partnership, with its principal place of

business in San Mateo,California. Baoand Gu controlled the DeYao Fund through its general 

partner, LendingCar. The DeYao Fund filed a Form D withthe Commission on May 29, 2018, in 

connection with a planned private offering of limited partnership interests.

9. Consultant A was a privately-held California business that was responsible for

providing risk management and related services to the DeYao Fund. The Fund entered into a

service contract with Consultant A in June 2018.

Facts

Formation of the DeYaoFund and Solicitation of Investors

10. Bao and Gu organized the DeYao Fund for the purpose of raising money from

investors to finance dealer floor plan loans. A dealer floor plan loan is used by automobile

dealerships to finance the purchase of carinventory. Typically, a lender will loan an amount to a

dealership, which will use the loan to purchase inventory; the dealer in turn will repay the loan

with the proceeds from the sale of the inventory. Prior to forming the DeYao Fund, Bao and Gu

had made dealerfloor plan loans to severalused car dealerships in California, through other
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businesses under their control. Bao and Gu organized the DeYaoFund in early 2018, and in May

2018, Gu filed a Form D on behalf of the DeYao Fund, seeking to conduct a private offering

pursuant to Rule 506(b) of the Securities Act, which provides an exemption from registration. 

11. To assistthem with the private offering, in June 2018 Baoand Gu, acting on behalf

of the DeYao Fund, entered into an agreement with Consultant A. Bao and Gu informed

Consultant A that they intended to use the DeYao Fund as a vehicle to raise monies from investors

to finance dealer floor plan loans to used car automobile dealerships. Based on information

provided by Bao and Gu, Consultant A assisted in finalizing the structure of the Fund, and

preparing a private placement memorandum (“PPM”),a limited partnership agreement, anda slide

deckto be used for soliciting prospective investors.

12. The offering materials contained representationsregarding the intended use of

capital invested in the DeYao Fund. For instance, the PPM stated that the objective of the DeYao

Fund wasto generate income and potential capital appreciation “by carefully selecting a portfolio

of usedcar dealership floor plan loans” and that the DeYaoFund was “to only generate loans that

were in the best interest” of the DeYao Fund’s limited partners (i.e., investors). The PPM further

represented that the DeYao Fund’s general partner, LendingCar, an entity controlled by Bao and 

Gu, would seekconsent of the investors to “take any action outside the scope of the purposes” of

the DeYaoFund.

13. The offering materials disclosed that LendingCar, the DeYaoFund’s general

partner,had exclusive management and control over the business of the Fund, including all

decisions to invest in securities. The offering materials stated that LendingCar was responsible for

formulating and implementing the Fund’s investment strategy and making all investment

decisions. As compensation for its advisory and management services, LendingCar was to receive

a 1% annual management fee.

14. The offering materials further described the manner in which dealer floor plan loans

were to be originated. In particular, the DeYao Fund, at the direction of its general partner,

LendingCar, was to transmit monies to H7 Credit, a loan origination entity controlled by Bao and

Gu. In connection with such transfers, a note was to be executed between the DeYao Fund and H7

Credit to secure the monies. H7 Credit, in turn, was responsible for selecting the automobile

dealerships and executing the dealer floor plan loan agreements. H7 Credit was also responsible for

conducting the appropriate due diligence, including conducting an analysis of each dealership and

its credit application, and maintaining documentation supporting the loans. To mitigate risk of

investor losses on the loans, the DeYaoFund would be granted a security interest in any vehicle

financed by a dealer floor plan loan, and H7 Credit was to conservatively value vehicles and abide

by loan to value limits of 70% of the value of the vehicles.

15. BetweenNovember 2018 and February 2019, the DeYaoFund raisedat least

$450,000 from investors, in exchange forlimited partnership interests in the Fund. Eachof the

investors receivedthe PPM, the limited partnership agreement, and promotional slides and wired 

their respective investments directly to a bank account held in the name of the DeYaoFund that

was controlled by Bao and Gu.
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Bao and GuMisappropriate DeYaoFund Assets

16. Shortly after the first investment in the Fund in November 2018 and continuing

through early 2019, Bao and Gu diverted DeYao Fund assets from their intended use. As

contemplated by the offering materials, the DeYaoFund transferred$450,000 in DeYaoFund

assetstoa bank account in the name of H7 Credit that was controlled by Baoand Gu. However,

instead of using the Fund’s assetstooriginate dealer floor plan loans by H7 Credit asinvestors had

been led to believe, Bao and Gu misappropriated the monies.

17. Among other things, Bao and Gu used the Fund’s assetstopay off preexisting debts

owed by LendingCar and H7 Credit and to cover rent payments owed by H7 Credit. Baoand Gu

also used the Fund’s assets to purchase pre-existing loans originated by individuals to dealers; these

individuals were creditors of H7 Credit. None of these uses were consistentwith representations made

to investors in the offering materials.

18. Contrary to representations funds in the PPM, Bao and Gu, acting through H7 

Credit, failed to maintain documentation evidencing that any dealer floor plan loan had been 

made with the Fund’s assets; that any due diligence had been conducted in connection with any 

dealer floor plan loan; or that any security interest in a vehicle was held by the DeYao Fund. 

Such documentation was also required to be maintained by the limited partnership agreement. 

Bao and GuAttemptto Concealthe Misappropriation

19. The PPM stated that Consultant A would analyze the DeYao Fund’s portfolio and

provide risk management services to the Fund. As part of those services, Consultant A was

responsible for conducting a periodic review of the DeYao Fund’s portfolio performance. In early

2019, as part of its first scheduled review, Consultant A requested the DeYao Fund provide copies

of loan documentation associated with dealer floor plan loans originated by H7 Credit since the

first investments had been received in November 2018.

20. In response to Consultant A’s request, Bao and Gu refused to provide any loan

documentation, claiming that to do so would violate privacy laws. Instead, Bao and Gu provided

spreadsheets purporting to summarize the loans that had beenoriginated, and their associatedloan

terms, as well as identifying information for the vehicles that had been purchased with investor

monies from the DeYao Fund. There were multiple irregularities in these documents, including

what appearedto be duplicated vehicle identification numbers (VINs) andinflation of the value of

many of the carsidentified.

21. In response to requests for clarification from Consultant A, Bao and Gu claimed

that any irregularities in the summary documents were the result of poor record-keeping.

22. Consultant A eventually terminated its relationship with the DeYao Fund, after

which investors sought the returnof their respective investments. To date,Baoand Gu have

repaid approximately $140,000 to investors.
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Violations

23. Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder, make it

“unlawful for any person, directly or indirectly” “(a) [t]o employ any device, scheme,or artifice to

defraud” or “(c) [t]o engage in any act, practice, or course of business which operates or would

operate as a fraud or deceit upon any person, in connection with the purchase or sale of any

security.” Rule 10b-5(b) makes it unlawful for any person “[t]o make any untrue statement of a

material fact or to omit to state a material fact necessary in order to make the statements made, in

light of the circumstances under which they were made,not misleading,” in connection with the

purchase or sale of any security.

24. Sections 17(a)(1) and (a)(3) of the Securities Actmake it “unlawful for any person

in the offer or sale of any securities” “to employ any device, scheme, or artifice to defraud” or “to

engage in any transaction, practice, or course of business which operates or would operate as a

fraud or deceit upon the purchaser.” Section 17(a)(2) of the Securities Actmakes it “unlawful for

any person in the offer or sale of securities” “to obtain money or property by means of any untrue

statement of a material fact or any omission to state a material fact necessary in order to make the

statementsmade,in light of the circumstances under which they were made,not misleading.”

25. Sections 206(1), 206(2) and 206(4) of the Advisers Act make it unlawful for an

investment adviser to, respectively, employ any device, scheme, or artifice to defraud, or to engage

in any transaction, practice, or course of business that operates as a fraud or deceit upon any client

or prospective client. Rule 206(4)-8(a) thereunder prohibits making false or misleading statements

or otherwise engaging in an act,practice,or course of business that is fraudulent, deceptive or

manipulative with respecttoany investor in a pooled investment vehicle.

26. As a result of the conduct described above,Bao, Gu and LendingCar willfully

violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Section 17(a) of the

Securities Act andSections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)-8(a)

thereunder.

27. As a result of the conduct described above, H7 Credit willfully aided and abetted

Bao, Shuo and LendingCar’s violations of Section 10(b) of the Exchange Act and Rule 10b-5

thereunder, Section 17(a) of the Securities Act and Sections 206(1), 206(2) and 206(4) of the

Advisers Act and Rule 206(4)-8(a) thereunder.

Disgorgement andCivil Penalties

28. The disgorgement and prejudgment interest ordered in paragraph IV.D is

consistent with equitable principles and does not exceed Respondents’ net profits from their

violations, and will be distributed to harmed investors to the extent feasible. The Commission will

hold funds paid pursuant to paragraph IV.D in an account at the United States Treasury pending

distribution. After the final distribution of funds and payment of all taxes and administrative 

expenses, any amounts remaining that are infeasible to return to investors, and any amounts 

returned to the Commission in the future that are infeasible to return to investors, shall be 

transferred to the general fund of the U.S. Treasury subject to Section 21F(g)(3) of the 
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Exchange Act.

29. Respondents have submitted sworn Statements of Financial Condition dated

December 31, 2020, and other evidence and have assertedtheir inability to pay disgorgement,

prejudgment interest, and a civil monetary penalty.

Undertakings

30. Respondents have undertaken to refrain from, directly or indirectly, including but

not limited to through any entity owned or controlled by Respondents, participating in the

issuance, purchase, offer, or sale of any security, provided, however, that such undertaking

shall not prevent Respondents from purchasing or selling securities for their own personal

accounts. In determining whether to accept the Offers, the Commission has considered this

undertaking.

IV.

In view of the foregoing, the Commission deemsit appropriate, in the public interest, to

impose the sanctions agreedto in Respondents’ Offers.

Accordingly, pursuant to Section 8A of the Securities Act,Section 21C of the Exchange

Act, Sections 203(f) and 203(k) of the Advisers Act,and Section 9(b) of the Investment Company

Act, it is hereby ORDERED that:

A. Respondents cease and desist from committing or causing any violations and any

future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule

10b-5 thereunder,and Sections 206(1), 206(2), and206(4) of the Advisers Act and Rule 206(4)-8(a)

thereunder.

B. Respondents Bao and Gu be and hereby are:

barredfrom association with any investment adviser, broker, dealer, municipal

securities dealer, municipal advisor, transfer agent, or nationally recognized

statisticalrating organization; and

prohibited from serving or acting as employees, officers,directors, members of an

advisory board, investment adviser or depositor of, or principal underwritersfor, a

registered investment company or affiliated person of such investment adviser,

depositor, or principal underwriter.

C. Any reapplication for association by Respondents Bao or Gu will be subject to the

applicable laws and regulations governing the reentry process, and reentry may be conditioned

upon a number of factors, including, but not limited to, compliance with the Commission’s order

and payment of any or all of the following: (a) any disgorgement or civil penalties ordered by a

Court against the Respondents in any action brought by the Commission; (b) any disgorgement
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amounts ordered against the Respondents for which the Commission waived payment; (c) any

arbitration award related to the conduct that served as the basis for the Commission order; (d) any

self-regulatory organization arbitration award to a customer, whether or not related to the conduct

thatservedasthe basis for the Commission order; and (e) any restitution order by a self-regulatory

organization, whether or not related to the conduct thatservedasthe basis for the Commission

order.

D. Respondents shall pay, jointly and severally, disgorgement of $310,000 and

prejudgment interest of $29,012.40, but payment of such amounts exceptfor $103,000 in 

disgorgement is waived, and no penalty is being imposed, basedupon Respondents’ sworn 

representationsin their Statements of Financial Condition dated December 31, 2020, and other documents

submitted to the Commission. If timely payment on disgorgement is not made, additional interest shall

accrue pursuant to SEC Rule of Practice 600. Paymentshall be made in the following installments:

1. $15,450.00 within 10 days of the entryof this Order;

2. $10,943.75 within 90 days of the entryof this Order;

3. $10,943.75 within 180 days of the entry of this Order;

4. $10,943.75 within 270 days of the entry of this Order;

5. $10,943.75 within 360 days of the entry of this Order;

6. $10,943.75 within 450 days of the entry of this Order;

7. $10,943.75 within 540 days of the entry of this Order;

8. $10,943.75 within 630 days of the entry of this Order;

9. $10,943.75 within 720 days of the entry of this Order.

Payments shall be applied first to post order interest, which accrues pursuant to SEC Rule of Practice 

600. Prior to making the final payment set forth herein, Respondent shall contact the staff of the 

Commission for the amount due. If Respondent fails to make any payment by the date agreed and/or in 

the amount agreed according to the schedule set forth above, all outstanding payments under this Order, 

including post-order interest, minus any payments made, shall become due and payable immediately at 

the discretion of the staff of the Commission without further application to the Commission. 

Paymentmust be made in one of the following ways:

(1) Respondents may transmit payment electronically to the Commission,

which will provide detailed ACH transfer/Fedwire instructions upon

request;

(2) Respondents may make direct payment from a bank account via Pay.gov

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondents may pay by certified check, bank cashier’s check, or United

States postal money order, made payable to the Securities and Exchange

Commission and hand-delivered or mailed to:
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Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthurBoulevard

Oklahoma City, OK 73169

Payments by checkor money order must be accompanied by a cover letter identifying the

Respondents in these proceedings, and the file number of these proceedings; a copy of the cover

letter and checkormoney order must be sent to Anita B. Bandy, Associate Director,Division of

Enforcement,Securities and Exchange Commission, 100 F St., NE,Washington, DC20549.

If Respondents fail to make any payment by the date agreedand/or in the amount agreed

according to the schedule set forth above, all outstanding payments under this Order, including

post-order interest, minus any payments made, shall become due and payable immediately at the

discretion of the staff ofthe Commission without further application to the Commission.

E. The Division of Enforcement (“Division”) may, at any time following the entry of

this Order, petition the Commission to: (1) reopen this matter to consider whether Respondents

provided accurate and complete financial information at the time such representations were made;

and (2) seek an order directing payment of disgorgement, prejudgment interest and directing

payment of the maximum civil penalty allowable under the law. No other issue shall be considered

in connection with this petition other than whether the financial information provided by

Respondents wasfraudulent, misleading, inaccurate, or incomplete in any material respect.

Respondents may not, by way of defense to any such petition: (1) contest the findings in this

Order; (2) assert that payment of disgorgement and interest should not be ordered; (3) contest the

amount of disgorgement and interest to be ordered; or (4) assert any defense to liability or remedy,

including, but not limited to, any statute of limitations defense.

F. Respondents shall comply with the undertakings enumeratedin paragraph 30 above.

V.

It is furtherOrderedthat, solely for purposes of exceptions to discharge setforth in Section

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by

Respondents, and further, any debt for disgorgement, prejudgment interest, civil penalty or other

amounts due by Respondents under this Order or anyother judgment, order, consent order, decree

or settlement agreement enteredin connection with this proceeding, is a debt for the violation by

Respondents of the federal securities laws or any regulation or order issued under such laws, as set

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).

By the Commission.

Vanessa A.Countryman

Secretary