SEC indicates settlement may be near in action against Ponzi scam targeting college kids

Maria Nikolova

Counsel for the US regulator and Syed Arham Arbab, who stands accused of fraud, anticipate finalizing a settlement in the next few weeks.

The United States Securities and Exchange Commission (SEC) has hinted at a possible settlement with 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). As FinanceFeeds has reported, Arbab – a former student of the University of Georgia, and the entities he controlled, are accused of fraud.

According to documents filed by the SEC with the Georgia Middle District Court on September 13, 2019, counsel for the parties had begun discussing the possibility of settling this matter. Those discussions are ongoing, and counsel for the parties have prepared settlement documents and are in the process of exchanging comments on those documents.

Counsel for the SEC and the defendants anticipate finalizing a settlement in the next few weeks.

Counsel for Arbab has indicated that he and Arbab’s criminal counsel are in discussions with the U.S. Attorney’s Office about a possible plea agreement, and that working out the terms of the plea is the only impediment to completing a settlement in the case brought by the SEC.

The US regulator and Arbab are now seeking a three week extension to file Proposed Scheduling/Discovery Order (that is, until October 4, 2019) so that the parties can engage in meaningful settlement negotiations, and to allow the criminal plea agreement to be finalized.

According to the SEC’s Complaint, from at least May 2018 to 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.

Arbab described 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.

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