International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Monday, October 14, 2019

Georgia Man Pleads Guilty to Operating Ponzi Scheme on University of Georgia’s Campus

A former University of Georgia undergraduate student pleaded guilty today for his role in a $1 million Ponzi scheme that targeted investors, including his fellow students. 

Syed Arham Arbab, 22, of Augusta, Georgia, pleaded guilty to a one-count information charging him with securities fraud before U.S. District Judge C. Ashley Royal of the Middle District of Georgia.  Arbab further admitted that he spent investor funds on personal expenses, including clothing, shoes, retail purchases, fine dining, alcoholic beverages, adult entertainment and interstate travel, including spending thousands of dollars gambling during three trips to Las Vegas in 2018 and 2019.

As part of his guilty plea, Arbab admitted that from May 2018 through May 2019, while enrolled as an undergraduate student at the University of Georgia campus in Athens, Georgia, he solicited investors, many of whom were his fellow students, to invest in his entities, Artis Proficio Capital Management and Artis Proficio Capital Investments (collectively, APC), which he told investors were “hedge funds.”  Arbab admitted that he convinced approximately 117 investors in Georgia and other states to invest funds with him and APC.

Arbab admitted that he made a number of misrepresentations in order to persuade victims to invest with him, including misrepresenting the funds’ returns, the number of investors, the total funds invested and the nature of the investment plays being made.  He also admitted fabricating account statements.  Victims invested approximately $1 million with Arbab in the course of his scheme, with Arbab falsely promising rates of returns as high as 22 percent or 56 percent, when his overall returns were nowhere near these amounts.  Arbab offered some investors a seemingly risk-free “guarantee” on the first $15,000 invested, and the majority of investors, especially those who were students or younger professionals, invested less than this amount, believing that even if Arbab’s investment choices proved unsound or the market behaved unpredictably, they would still be paid back their entire principal investment.  

Arbab admitted that knew he did not have the liquid capital to make good on these guarantees when he made them, but he did not disclose this to his investors.  Further, when Arbab learned that some prospective investors were UGA football fans, he told them that a famous NFL player and UGA alumnus was an investor in the fund, when in fact the football player had never invested with APC.  Arbab also misrepresented that he was an MBA candidate at UGA’s Terry College of Business. In fact, ARBAB had applied to and been rejected by UGA’s MBA program and was operating the fund primarily from his fraternity house as an undergraduate.

Arbab is also the subject of a previously filed civil complaint by the SEC alleging a Ponzi scheme and offering fraud.

https://lawprofessors.typepad.com/intfinlaw/2019/10/georgia-man-pleads-guilty-to-operating-ponzi-scheme-on-university-of-georgias-campus.html

AML | Permalink

Comments

Post a comment