SEC brings fraud charges against former student of University of Georgia over Ponzi scheme
Syed Arham Arbab claimed his “firm” was “different because we target young investors/college kids”.
The United States Securities and Exchange Commission (SEC) has launched an action against Syed Arham Arbab, a former student at the University of Georgia, and two entities under his operation and control – Artis Proficio Capital Investments, LLC (APCI) and Artis Proficio Capital Management, LLC (APCM). The regulator has filed a complaint against these three defendants at the Georgia Middle District Court.
Arbab and his entities are charged with fraud.
According to the SEC’s Complaint, seen by FinanceFeeds, between at least May 2018 and as recently as May 17, 2019, Arbab, acting individually or through APCI and APCM, offered and sold investments in a purported hedge fund, called Artis Proficio Capital. He promised very high rates of return, and sent investors account updates purporting to substantiate those claims. Arbab also offered and sold certain “bond agreements,” which function like promissory notes.
Syed Arham Arbab, age 22 and a resident of Athens, Georgia, describes himself as the Fund’s “Partner” and “Chief Investment and Financial Officer.” Arbab is not registered with the Commission in any capacity.
In May 2018, Arbab began soliciting investors for investments in the Fund, which he told investors he managed and controlled. He represented to investors that he had already finished his undergraduate degree and was working on a master’s degree in business administration (MBA) from UGA. In reality, Arbab did not receive an undergraduate degree from UGA until May 2019, which was in cellular biology and genetics. He has never been enrolled in UGA’s MBA program.
In text messages and emails to investors and potential investors, Arbab made multiple representations about the Fund, including
- his “firm” was “different because we target young investors/college kids;”
- money invested in the Fund was “GUARANTEED and backed up to 15,000$;”
- the Fund had earned annual returns that he variously described as ranging between 22 to 56 percent;
- the Fund would have lower costs than most other hedge funds because Arbab would not take any percentage of the initial investment and would only take “15% off [an investor’s] capital gains after calculating taxes;”
- investors could withdraw their money with two weeks advance notice.
Contrary to Arbab’s claims, the Fund never existed, and, upon information and belief, there is no brokerage account existing in the name of the Fund, APCI, or APCM.
The SEC has found that, from May 2018, when Arbab started soliciting investments for the Fund, and January 2019, Arbab deposited all or most of the investor funds he received for the Fund and for bond agreements into his personal bank account or his personal brokerage accounts. From his personal bank account, Arbab paid various living expenses, including more than $10,000 in cash withdrawals and more than $5,000 in hotel and nightclub expenses during a December 2018 gambling trip with friends in and around Las Vegas, Nevada.
The SEC requests that the Court issues an emergency, temporary, and preliminary order against the defendants: (i) restraining the defendants from their on-going Ponzi scheme and fraudulent offering of securities; (ii) freezing the assets of the defendants; (iii) requiring an accounting by the defendants of the use of proceeds of the fraudulent conduct described in this Complaint; (iv) expediting discovery in this action; (v) preventing document concealment, destruction or alteration; and (vi) requiring the defendants to show cause why the Court should not issue a Preliminary Injunction and impose other relief against them.
The SEC is also seeking a civil monetary penalty and disgorgement.