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NEWSLETTERS & ALERTS
SEC Confronts an ‘Animal House’ Ponzi Scheme at UGA
By Howard Haykin
The SEC has charged a recent college graduate with operating a Ponzi scheme from a fraternity house located near the campus of the University of Georgia in Athens, GA. Operating individually or through a couple of entities under his operation and control, the individual, Syed Arhan Arbab allegedly offered college students and young investors the opportunity to invest in “Artis Proficio Capital,” a purported hedge fund that he claims to have managed.
Arbab, age 22 and a resident of Athens, GA, ... describes himself as the Fund’s “Partner” and “Chief Investment and Financial Officer.” He currently resides in a fraternity house in Athens, from which he purports to manage the Fund. Arbab is not registered with the Commission in any capacity
WHAT THE SEC FOUND. From May 2018 to as recently as May 17, 2019, Arbab sold investments in Artis Proficio Capital by promising very high rates of return (e.g., the fund had generated returns of as much as 56% in the prior year) and by stating that investor funds were guaranteed up to $15,000. He also sold “bond agreements” that promised investors the return of their money along with a fixed rate of return. All told, Arbab raised at least $269,000 from at least 8 college students, recent graduates, and/or their family members.
In reality, no hedge fund existed, the claimed performance returns were fictitious, and Arbab never invested the funds as represented. Instead, he placed substantial portions of investor funds in his personal bank and brokerage accounts, and used those funds for his own benefit. Arbab also 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.
The SEC requested emergency relief in this case, as Arbab has continued to solicit additional money from his victims, even after becoming aware of the SEC's investigation.
[For further details, click on SEC Complaint.]