Indian-Origin Man Charged for Allegedly Stealing $250,000 in Ponzi Scheme in New Jersey
Niket Shah, 25, was allegedly using investor money for personal expenses and showed them false statements about returns.
The Securities and Exchange Commission (SEC) has charged an Indian-origin man in New Jersey with stealing $250,000 through a Ponzi Scheme from 15 investors since March 2017, according to a court filing by the SEC.
The SEC Commission ordered a preliminary injunction and asset freeze against Niket Shah, 25, of New Jersey and Spark Trading Group, LLC for the alleged crime.
Through his company Spark Trading, Shah allegedly offered and sold the securities based on knowingly false and misleading statements with the intent to deceive the purchasers, employed schemes and artifices to defraud the purchasers, and engaged in transactions, practices and a course of business that operated as a fraud or deceit upon the purchasers in connection with the purchase and sale of the securities, the complaint said.
The money from the 15 investors was transferred for purposes apart from investment and they were misled by false statements, according to the complaint. Investors’ money was allegedly transferred to Shah’s personal account for paying off previous investors in a Ponzi-like scheme and for personal expenses, such as liquor, bars and restaurants.
Shah was using the account to transfer investors’ funds as late as Feb. 28, 2018 and has withdrawn the entire amount, the filing said.
The SEC sought an emergency injunction against Shah and the company to protect remaining investor funds and to locate any remaining funds.
Shah used to work for a hedge fund administrator located in New York City during 2016. A hedge fund administrator provides back office and middle office support to hedge funds, such as accounting, bookkeeping and research services. He was not a hedge fund manager, the SEC said.
He met his future investors and started trading binary options for his own account outside his work hours. Binary options are a type of financial futures contract regulated by the Commodities Futures Trading Commission. Shah opened an account on a binary options exchange in May 2016 and traded from his personal account.
Spark Trading Group, LLC is a limited liability company headquartered in Clifton, New Jersey. It was formed by Shah in June 2017, and is controlled by him. Spark Trading is not registered with the Commission in any capacity, the filing said.