SEC Fines Ponzi scheme operators: $10 mln in fraud

1 June, AtoZForex, Vilnius — The Securities and Exchange commission (SEC), which is role is to protect investors and keep the fair and consistent environment in the market, has recently charged two Californian citizens and their investment firm’s JSG Capital Investments for the illegal market activity.

Jaswant Gill and Javier Rios were operating with a Ponzi scheme, where the payment of the profits is conducted using the new investors’ assets, but not with the legitimate methods. As SEC fines Ponzi scheme operators, it is known, that individuals were soliciting to the middle-class investors, offering the opportunity to make large amounts of profit through investing in pre-IPO stocks.

JSG Capital Investments’ claims

The investment firm, owned by the two individuals, is offering “investment strategies that are built on the foundation of risk reduction, return enhancement, tax efficiency and cost containment”, as it is reported on their official website. They claim to be present in New York, Southern California, and Northern California. What is more, the company also states that they have a competitive advantage among other firms, which comprises their “relationships and networking with Wall Street analysts”.

How the $10 million Ponzi Scheme worked

SEC has charged Jaswant Gill, Javier Rios and their company for fraudulent operations, where they were promising investors to get the IPO-shares of the tech companies. What is more, they claimed to deliver an annual ROI of almost 60 percent. The reality for investors was not as bright, as it was promised. The JSG Capital Investments never actually invested in any pre-IPO shares. Jaswant Gill and Javier Rios have raised over $10 million through their investment firm, by promising the middle-class investors the unique investment opportunities, which are “previously only available to the one-percenters”.

The individuals gained ill-profits of almost $2.8 million in investor funds through the Ponzi operation. The individuals were pocketing the money and wasting it on the luxurious restaurants, gentlemen’s clubs, and Las Vegas casinos.

As it is reported by SEC, one of the individuals, Jaswant Gill, was using fake credentials, claiming that he was serving as a managing director at Morgan Stanley. Furthermore, he supposedly misled the investors regarding his partnership agreements, claiming that he signed several contracts with few leading venture capital firms.

SEC’s complaint and charges

As it was stated by theDirector of the SEC’s San Francisco Regional Office, Jina Choi earlier:

“We allege that Gill and Rios enticed middle-class investors by promising access to highly coveted investment opportunities they claimed were typically reserved for the rich. Exclusivity, exorbitant returns, and exaggerated credentials are all classic hallmarks of a Ponzi scheme, and investors can protect themselves by heeding these red flags and checking whether the person pitching the investments is properly registered to sell them.”

Additionally, as SEC fines Ponzi scheme operators, it appears that neither both the individuals nor their investment firm are not registered with the SEC or any state regulator.

SEC is about to penalize Gill, Rios and the JSG Capital Investments and the allied entities with the fine. Also, the SEC’s complaint filed in federal court in San Francisco requires permanent injunctions and disgorgement in regards to the above-mentioned individuals and firm as well as the freeze of all the assets owned by them.

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