SEC obtains asset freezing order against Ponzi scammers targeting college kids

Shortly after the United States Securities and Exchange Commission (SEC) launched an action in order to halt a Ponzi scam run from a college fraternity house, the regulator has managed to obtain an Order for Preliminary Injunction and Other Equitable Relief against Syed Arham Arbab, Artis Proficio Capital Investments, LLC (APCI), and Artis Proficio Capital Management, LLC (APCM).

The Order was signed on June 4, 2019, by Judge Clay D Land of the Georgia Middle District Court.

The defendants have consented to the Court’s jurisdiction over them and the subject matter of this action; and have consented to entry of this Order for Preliminary Injunction and Other Equitable Relief, without admitting or denying the allegations of the Complaint.

The Court ordered that the assets of Arbab, APCI and APCM are frozen. The freeze shall include but not be limited to those funds located in any bank accounts of the defendants. In addition, proceeds derived from the securities offerings alleged in the Commission’s complaint remaining in the custody or control of any defendant are hereby frozen regardless of where said proceeds are located.

Arbab, however, will be allowed to open a new checking account in his own name to fund his living expenses going forward. This account shall not be covered by the freeze provisions of this order provided that the account only receives assets that Arbab acquired or received after June 1, 2019.

Arbab will have to present all names by which every person with authority to exercise control of APCI and APCM is known, all business and residence addresses, postal box numbers, telephone numbers, and facsimile numbers, e-mail addresses and the nationality of such persons; and each account with any financial institution or brokerage firm maintained in each defendant’s name or held for each defendant’s direct or indirect beneficial interest from May 1, 2018 through the present.

The defendants will have to prepare and present to the Court and to the Commission a sworn accounting of all funds received by each Defendant pursuant to the scheme described in the Commission’s Complaint and of the disposition and use of said proceeds.

The defendants are also restrained from, in connection with the purchase or sale or in the offer or sale of securities, employing any device, scheme, or artifice to defraud.

According to the SEC’s Complaint, 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.