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25 Mar 2018

Indian-origin ponzi schemer charged in US with $250,000 fraud

Indian-origin man in US charged with $250,000 fraud

An Indian-origin man in the US has been charged with stealing more than $250,000 in a Ponzi scheme in which his friends and coworkers invested.

Niket Shah of New Jersey was charged by the Securities and Exchange Commission (SEC) which also ordered a preliminary injunction and asset freeze against him.

Shah used Spark Trading Group to defraud the investors.

In context

Indian-origin man in US charged with $250,000 fraud
Shah defrauded more than 15 investors into contributing money

Fraud

Shah defrauded more than 15 investors into contributing money

SEC's complaint stated that Shah defrauded more than 15 investors into contributing hundreds of thousands of dollars to two funds that he marketed.

He obtained investments for the funds by lying about his success as a trader, Spark Trading's returns, and how he intended to use investors' money, including altering financial statements to make the funds appear profitable when they were actually losing money.

Investors

Shah promised investors monthly returns, and guaranteed against losses

According to the SEC's complaint, Shah allegedly promised the investors monthly returns and guaranteed against losses, but misused the money for his own benefit and suffered substantial losses on the amounts actually invested.

When investors sought their money back, he lied and said the money had been frozen by government agencies, including the Commission.

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Court granted SEC's request for preliminary injunction, asset freeze

Verdict

Court granted SEC's request for preliminary injunction, asset freeze

The SEC's complaint charges Spark Trading and Shah with violations of the anti-fraud provisions of the federal securities laws.

SEC is seeking the return of allegedly ill-gotten gains with interest and civil money penalties.

A court hearing was held Friday at which Justice Brian M Cogan granted the SEC's request for preliminary injunction, asset freeze, order against the destruction of documents, and an accounting.

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