A University of Georgia student charged with running a “Ponzi-like” scheme that defrauded more than $1.0 million from investors, pled guilty in a US federal court.
The Securities and Exchange Commission (SEC) accused Syed Arham Arbab, 22, who of defrauding 117 investors in Georgia and other states to invest in an unregistered and fake hedge fund called Artis Proficio Capital.
The documents submitted to the court also paint a fairly concise picture of his fraudulent scheme, outlining his interaction and contact with less experienced victims, including fellow UGA students and their family members.
In particular, the documents cite emails to investors and potential investors where he guaranteed returns between 22 and 56 percent, when, in fact, his overall returns were nowhere near these rates. Arbab, who received a degree in cellular, also offered students and younger professionals risk-free investments through guaranteed and backed up plans that cover the first $15,000 investment.
Arbab pleaded guilty to a one-count information charging him with securities fraud. If convicted with this charge, he could face up to 30 years in prison and a fine of $1 million. He is scheduled to be sentenced on January 8, 2020.
Digitex Futures Partners with ChainlinkGo to article >>
Arbab spent the funds on gambling trips to Vegas
To create the illusion of stability, the defendant distributed false account statements to pool participants, telling them that he was a successful asset manager and was working on a master’s degree in business administration from UGA. All the while, Arbab concealed large trading losses from investors and published false statements showing large balances in his fake hedge fund that did not exist.
Created in May 2018 and dissolved after one year, the investment pools didn’t generate any income while Arbab lost $300,000 in trading and that, when his brokerage account closed, he had just $350 left.
According to the SEC, Arbab “used the balance of the funds he obtained to make Ponzi payments to prior investors, paying investors seeking to withdraw some or all of their investment using money received from subsequent investors.”
Syed also spent a portion of his victims’ monies to pay for his personal expenses, including Uber rides, bar, and liquor store purchases, and multiple gambling trips to Las Vegas, among others.
Immediately after the complaint was filed by the SEC in June, a Georgia court issued an emergency order freezing preserving assets under the Arbab’s control and prohibiting him from “destruction or concealment of their books and records.”