A venture capital fund manager has been ordered to pay more than $8 million for cheating people who thought they were getting an early chance to buy Twitter and Uber stocks before the companies went public.
Gregory W. Gray Jr. of Buffalo, N.Y., and his companies, Archipel Capital LLC and BIM Management LP, raised nearly $5.3 million from investors who thought they were purchasing pre-IPO Twitter shares, the Securities and Exchange Commission said.
However, Gray did not purchase enough shares before Twitter went public in November 2013, and he only managed to pay investors in the Twitter-related fund by tapping three other unrelated funds, according to the SEC.
The complaint says more than half of the money used to make these Ponzi-like payments came from one investor who was told he had bought $5 million worth of stock in Uber Technologies Inc., when Gray actually had not purchased any stock in Uber.
Without admitting or denying the charges, Gray agreed to the payment, which includes disgorgement of the investors’ funds and interest. He was also charged criminally and pled guilty to securities fraud and perjury. He was sentenced in October to 24 months in prison.