The US Securities and Exchange Commission (SEC) is accusing a recent college graduate of running a Ponzi fraud that targeted young investors, including college students and other recent graduates. The regulator announced its emergency action against Syed Arham Arbab, Artis Proficio Capital Management, LLC, and Artis Proficio Capital Investments, LLC this week. It wants an asset freeze, emergency relief, civil penalties, and the repayment of allegedly ill-gotten earnings along with prejudgment interest.
At least eight college students, recent college graduates, or their relatives invested over $269K in the alleged hedge fund fraud. According to the regulator’s complaint, Arbab ran his scam out of a fraternity house close to the University of Georgia campus. He is a recent alumni and is accused of using his college connections to perpetuate his alleged scam.
According to the SEC’s complaint, Arbab sold investments in Artis Proficio Capital, a supposed hedge fund, that he touted as making up to 56% returns the year before, and he supposedly guaranteed up to $15K of investor money. Investors who purchased bond agreements were told that their money would be returned with a fixed return rate.
In truth, said the SEC, there was no hedge fund, performance returns were fake, and investors’ funds were not used as Arbab told them they would be. Instead, he allegedly placed a healthy amount of the funds in his own brokerage and personal bank accounts and spent their money on himself, including for travel, shopping, and entertainment.
Also, new investors’ funds were used to pay earlier investors when they requested the return of their money. Some of these payments were even sent directly from the new investors to the earlier investors, per Arbab’s instructions, through Venmo and other apps. The new investors were misled into thinking that these earlier investors were fund managers or partners.
The SEC said that as recently as last month, Arbab was still looking for new fraud victims even after finding out that the Commission was conducting a probe into his alleged activities.
Insurer Ordered to Disgorge Almost $1.5M
In other Ponzi fraud news, the SEC now has a final judgment in its Ponzi fraud case against Pennsylvania-based insurance agent James E. Hocker, who is accused of defrauding retail investors of almost $1.5M.
As part of the judgment, Hocker must disgorge nearly $1.5M—a figure that will be considered satisfied by the restitution ordered in a parallel criminal case for which he’s been sentenced to 17 years in prison.
Hocker is accused of falsely promising investors that they would receive 10-30% guaranteed returns on their investments, including in the S & P 500. He then went on to use their money to fund his own expenses. The regulator filed its investor fraud case against Hocker last year.
Ponzi scams have been known to defraud all kinds of investors, from retail investors to sophisticated investors, including high net worth individual investors and institutional clients.
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