SEC: Ex-UGA student ran Ponzi scheme that defrauded students

SEC: Ex-UGA student ran Ponzi scheme that defrauded students

For most University of Georgia students, SEC means Southeastern Conference sports. But one former Bulldog just encountered a different kind of SEC.

The Securities and Exchange Commission last week filed a civil complaint in federal court in Athens accusing Syed Arham Arbab of running a Ponzi scheme out of an unnamed fraternity house.

The SEC alleges Arbab, 22, defrauded at least eight people — including fellow UGA students, graduates and their family members — of at least $269,000.

Arbab allegedly used the funds for Las Vegas gambling trips, adult entertainment and other personal expenses, the complaint said. The hedge fund Arbab purportedly ran, Artis Proficio Capital, wasn’t real, and investment returns he reported to clients through an online portal were allegedly fictitious.

“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,” Richard Best, regional director of the SEC in Atlanta, said in a news release on Monday.

Messages seeking comment from Arbab and his attorney were not immediately returned. The SEC did not identify the fraternity house, but an address listed for Arbab in federal court records matches the address of the Phi Kappa Tau fraternity house on West Broad Street in downtown Athens. 

On Friday, the SEC filed a complaint seeking an emergency injunction from a judge to freeze assets held by Arbab and two companies he controlled.

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The SEC alleges Arbab operated the purported hedge fund from May 2018 to May of this year. In text messages, Arbab allegedly told investors his firm was “different because we target young investors/college kids,” and he charged lower commissions. Arbab allegedly assured investors he’d generated returns as high as 56 percent and guaranteed investments of up to $15,000.

The SEC said Arbab also sold “bond agreements,” which were like loans. Instead, Arbab allegedly deposited funds in his bank account and used new proceeds to pay off previous investors who sought money.

During the course of the alleged scheme, Arbab allegedly lost more than $300,000 in trading, leaving just $350 when his brokerage account was closed, the complaint said. Arbab also allegedly tricked clients into sending money to earlier investors through digital payments services such as Zelle and Venmo, telling the client the money was being sent to other partners or employees.

The SEC said an emergency order was needed because Arbab allegedly continued to solicit investors even after becoming aware of the SEC’s investigation.

A website for Artis Proficio shows the skyline of San Francisco and states the fund “is an investment vehicle that aims to derive returns independent from the direction of the global markets.”

It lists Arbab as partner and chief investment and financial officer. A bio on the website states that Arbab graduated cum laude from UGA with a degree in cellular biology, and that he is working on a masters of business administration at UGA’s business school.

But the SEC said Arbab hasn’t enrolled in Georgia’s MBA program.

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