Purported Venture Capital Fund Manager Charged By SEC with Fraud

Ever thought that investing in startups could be really profitable? If yes, these are precisely the type of investors that Gregory W. Gray Jr. and his firms, Archipel Capital LLC and BIM Management LP, have been looking for.

According to an announcement made by the U.S. Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC), Mr. Gray has been running a couple of schemes, alleging that he was investing money in popular Startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c Read this Term companies, when in fact he was merely defrauding investors of their money and paying back older investors in his funds.

He allegedly set up a number of venture capital investment funds, operating from Buffalo, N.Y., duping his victims into thinking that he was using their money to purchase shares of Twitter and Uber Technologies.

According to the SEC, the companies of Gregory W. Gray Jr., Archipel Capital LLC and BIM Management LP, pitched to investors that they would be purchasing shares of now publicly listed social media network, Twitter, before the IPO in November 2013.

After managing to purchase about 80,000 shares instead of the 230,000 which he could have done with the $5.3 million raised from investors, Mr. Gray has been pressured by them to deliver on his promise to them.

In order to make up the difference in missing funds he turned to tapping three other funds to pay out his Twitter investors.

The shortfall was mostly covered by one big backer who was told that his funds would be used to purchase a $5 million stake in Uber Technologies. Gray doctored some documents to show a purported stock purchase agreement to his client, which he manufactured from using documentation from a different company.

The Director of the SEC’s New York Regional Office, Andrew M. Calamari, said, “Gray sold investors on a seemingly great idea to acquire pre-IPO shares of high-profile companies like Twitter and Uber at a low price. But rather than come clean when he failed to invest as promised, Gray stole from investors to cover his misdeeds.”

The SEC filed a component with the U.S. District Court of the Southern District of New York, seeking preliminary relief and a temporary restraining order, permanent injunctions and disgorgement against all defendants and a financial penalty.

The SEC’s complaint names several relief defendants associated with Archipel Capital and BIM for the purpose of recovering proceeds they received from the fraud.