SEC secures final judgment against Ponzi scheme Spark Trading Group
The operator of the scheme – Niket Shah, is ordered to pay a civil monetary penalty of $370,944.
The United States Securities and Exchange Commission (SEC) has announced that it has managed to obtain a final judgment from the New York Eastern District Court in a case against a Ponzi scheme.
The case was brought by the US regulator in March last year. Back then, the SEC announced charges and a preliminary injunction and asset freeze against Niket Shah, a New Jersey resident who stole more than $250,000 in a Ponzi scheme in which his friends and coworkers invested. According to the SEC’s Complaint, Shah used Spark Trading Group, LLC to defraud more than 15 investors into contributing hundreds of thousands of dollars to two funds that Shah marketed.
Shah obtained investments for the funds by misleading the investors about his success as a trader. He also lied about Spark Trading’s returns, and how he intended to use investors’ money, including altering financial statements to make the funds appear profitable when they were actually losing money.
The SEC’s Complaint alleges that Shah promised investors he would pay them monthly returns and guaranteed against losses. According to the Complaint, Shah misused investor money for his own benefit and suffered substantial losses on the amounts actually invested. When investors sought their money back, he lied and said the money had been frozen by government agencies, including the Commission.
The court’s final judgment follows the court’s issuance of summary judgment in the SEC’s favor. In granting summary judgment, the court found that Niket Shah and his company, Spark Trading Group LLC, falsely claimed that Spark Trading was registered with the SEC; that their investments were profitable; that investors’ funds were guaranteed; and that defendants received $250,000 in start-up capital, including $200,000 that Shah deposited into a binary options trading account.
The final judgment permanently enjoins Niket Shah and Spark Trading from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment also finds Shah and Spark Trading jointly and severally liable for disgorgement of $299,229 plus interest of $24,742. Finally, the judgment also orders Shah to pay a civil penalty of $370,944.