The Securities and Exchange Commission yesterday announced an emergency action charging a recent college graduate with orchestrating a Ponzi scheme that targeted college students and young investors. The SEC is seeking an asset freeze and other emergency relief.
The SEC’s complaint alleges that Syed Arham Arbab, 22, conducted the fraud from a fraternity house near the University of Georgia campus in Athens, Georgia. Arbab allegedly offered investments in a purported hedge fund called “Artis Proficio Capital,” which he claimed had generated returns of as much as 56% in the prior year and for which investor funds were guaranteed up to $15,000. Arbab also allegedly sold “bond agreements” which promised investors the return of their money along with a fixed rate of return. The SEC’s complaint alleges that at least eight college students, recent graduates, or their family members invested more than $269,000 in these investments.
According to the SEC’s complaint, no hedge fund existed, Arbab’s claimed performance returns were fictitious, and he never invested the funds as represented. Instead, as money was raised, Arbab allegedly placed substantial portions of investor funds in his personal bank and brokerage accounts, which he used for his own benefit, including trips to Las Vegas, shopping, travel, and entertainment. Arbab also allegedly used portions of new investor money to pay earlier investors who had asked for their money back, the hallmark of a Ponzi scheme. Arbab even instructed some new investors to send their money – unwittingly – to existing investors through payment applications such as Venmo, Zelle, and Cash App, and misleadingly told them that the existing investors were either a “partner” or “manager” in the fund.
“We allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students. This is a reminder that investors of all ages and experience levels—whether long-time investors or recent graduates investing funds from their first few paychecks—should carefully research investment opportunities and the people offering them,” said Richard R. Best, Regional Director of the SEC’s Atlanta Office. “To learn more, investors can find an overview of Ponzi scheme red flags on the SEC’s Investor.gov website.”
The SEC’s complaint, filed Friday in federal district court in Athens, Georgia, charges Arbab, Artis Proficio Capital Investments LLC, and Artis Proficio Capital Management LLC, with violating the antifraud provisions of the federal securities laws. The SEC is seeking an order freezing certain assets of Arbab and his entities, as well as a temporary restraining order, preliminary and permanent injunctive relief, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties.
The SEC’s Retail Strategy Task Force and Office of Investor Education and Advocacy (OIEA) encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov. There are also useful tips on avoiding investment fraud.
The SEC’s investigation was conducted by Brian M. Basinger, W. Shawn Murnahan, and Krysta M. Cannon of the Atlanta Regional Office. The investigation was supervised by Stephen E. Donahue. The litigation is being handled by Mr. Murnahan, with the assistance of Mr. Basinger, and will be overseen by M. Graham Loomis.
This is a press release from the Georgia Secretary of State’s Office.