Georgia man sentenced for running Ponzi scheme

September 25, 2020

By a Biometrica staffer

A man from Georgia has been sentenced to 5 years in prison followed by three years of supervised release for running a Ponzi scheme that ensnared over a hundred victims, including college students, the US Department of Justice said in a statement.

Syed Arham Arbab, 23, was also ordered to pay $509,032.12 in restitution to his victims. Arbab pleaded guilty in October 2019 to one count of securities fraud. He admitted that for a year from May 2018 he solicited investors while enrolled at the University of Georgia campus, many of whom were his fellow students, to invest in his entities – Artis Proficio Capital Management and Artis Proficio Capital Investments (collectively, APC), which he told investors were “hedge funds.”

Arbab admitted that he convinced around 117 investors in Georgia and other states to invest funds with him and APC, and that he made material misrepresentations to those investors in order to induce them to invest and maintain their investments with him.

He misrepresented the funds’ returns, the number of investors, the total funds invested and the nature of the investment plays being made. He also admitted fabricating account statements.  Victims invested roughly $1 million with him in the course of his scheme, with Arbab falsely promising returns as high as 22% or 56%, when his overall returns were nowhere near these amounts.

Arbab offered some investors a seemingly risk-free “guarantee” on the first $15,000 invested, and the majority of investors, especially those who were students or younger professionals, invested less than this amount, believing that even if Arbab’s investment choices proved unsound or the market behaved unpredictably, they would still be paid back their entire principal investment.

He admitted that he knew he did not have the liquid capital to make good on these guarantees when he made them, but did not disclose this to his investors. Further, when Arbab learned that some prospective investors were UGA football fans, he told them that a famous NFL player and UGA alumnus was an investor in the fund, when in fact the football player had never invested with APC.

Arbab also misrepresented that he was an MBA candidate at UGA’s Terry College of Business, when in reality he had applied to and been rejected by UGA’s MBA program. He was operating the fund primarily from his fraternity house as an undergraduate.

He spent investor funds on personal expenses, including clothing, shoes, retail purchases, fine dining, alcoholic beverages, adult entertainment and interstate travel, including spending thousands of dollars gambling during three trips to Las Vegas in 2018 and 2019.

Individuals who believe that they may be a victim in this case should visit the Fraud Section’s Victim Witness website for more information here.