The Securities and Exchange Commission on Tuesday charged a recent college graduate with running a Ponzi scheme from a fraternity house near the University of Georgia campus in Athens.
The SEC announced an emergency action charging that Syed Arham Arbab, 22, allegedly defrauded at least eight college students, recent graduates or their family members out of more than $269,000 in investments. The SEC is seeking an asset freeze and other emergency relief.
The complaint, filed Friday in federal district court in Athens, alleges that Arbab offered investments in a purported hedge fund called “Artis Proficio Capital,” which he claimed had generated returns of as much as 56 percent in the prior year and for which investor funds were guaranteed up to $15,000. Arbab also allegedly sold “bond agreements” that promised investors the return of their money along with a fixed rate of return.
The SEC complaint said no hedge fund existed, that Arbab’s claimed performance returns were fictitious and that he never invested the funds as represented. Instead, as money was raised, Arbab allegedly placed substantial portions of investor funds in his personal bank and brokerage accounts, which he used for his own benefit, including trips to Las Vegas, shopping, travel and entertainment.
The complaint also alleges that Arbab used portions of new investor money to pay earlier investors who had asked for their money back, the hallmark of a Ponzi scheme, the SEC said, noting that Arbab even instructed some new investors to send their money—unwittingly—to existing investors through payment applications such as Venmo, Zelle and Cash App, and misleadingly told them that the existing investors were either a “partner” or “manager” in the fund.
As a result of the scheme, Richard R. Best, regional director of the SEC’s Atlanta office, warns that “investors of all ages and experience levels—whether longtime investors or recent graduates investing funds from their first few paychecks—should carefully research investment opportunities and the people offering them.”
In addition to Arbab, the SEC also charged Artis Proficio Capital Investments LLC and Artis Proficio Capital Management LLC with violating the antifraud provisions of the federal securities laws. The SEC is seeking an order freezing certain assets of Arbab and his entities, as well as a temporary restraining order, preliminary and permanent injunctive relief, the return of allegedly ill-gotten gains with prejudgment interest and civil penalties.