The Securities and Exchange Commission issued an emergency action Monday charging a recent college graduate with orchestrating a Ponzi scheme that targeted college students and young investors.
The ongoing Ponzi scheme and offering fraud was conducted by Syed Arham Arbab, a former student at the University of Georgia, and two entities under his operation and control, Artis Proficio Capital Investments LLC and Artis Proficio Capital Management LLC.
The SEC is seeking an asset freeze and other emergency relief.
The SEC’s complaint alleges that 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’ that 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.
“We allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students,” said Richard Best, regional director of the SEC’s Atlanta Office, in a statement. “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.”
No hedge fund existed, the SEC said, and Arbab’s claimed performance returns were fictitious, and he never invested the funds as represented.
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 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.
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.