U.S Authorities Charge Two Indian-Origin Men With Securities, Wire Fraud

U.S federal authorities have charged two Indian-origin men with securities and wire fraud for allegedly fraudulently increasing the value of private funds that they advised by hundreds of millions of dollars, PTI reported.

New York-based Anilesh Ahuja, who served as the founder, CEO and chief investment officer of Premium Point Investments LP, that looked into hedge funds focused on structured credits products, was arrested on May 9, according to Audrey Strauss, the U.S. attorney for Southern District of New York. Ahuja is accused of “participation in securities fraud and wire fraud which related to mismarking of certain securities held in hedge funds that the firm looked into, thereby fraudulently inflating the net asset value of those funds as reported to investors and potential investors from 2014 to 2016.”

Strauss also announced the unsealing of charges against Ashish Dole, a former chief risk officer and trader at the firm, and Frank Dinucci, a former salesman at a broker-dealer.

Dole, 34, from White Plains in New York had pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, and one count of securities fraud in November last year. Dinucci, who also pleaded guilty, is cooperating with the government.

Charges were also filed against Amin Majidi, a former partner and portfolio manager at the firm, and Jeremy Shor,  who acted as a trader. The alleged mismarking of all these funds that the firm managed exceeded $200 million.

If convicted, Ahuja, 49, Majidi, 52, and Shor, 46, could get up to 25 years behind the bars and a maximum fine of $5 million each. “Investors rely on a hedge fund’s performance numbers when deciding whom to trust with their capital. To compete with other peer funds, Ahuja, founder of an investment firm, allegedly manipulated the firm’s performance numbers, using fraudulently inflated values for the firm’s securities holdings and lying to investors about how the firm would mark its positions,” Strauss was quoted as saying by the news agency.

Ahuja and his co-defendants allegedly made the fund look more attractive for potential investors as well as current investors by persuading them against withdrawing their investments by fudging the books.

The Securities and Exchange Commission has also filed civil charges against Ahuja, Majidi, and Shor, which said that from 2014 to 2016, the three, along with Dole and Dinucci, were part of a scheme to defraud the firm’s investors and potential investors by fraudulent mismarking the value of certain securities held in various funds each month, inflating the new value of those funds. As per the documents filed by the Commission, the net asset value was overstated by more than $200 million across the funds managed by the firm.