Tuesday, June 15, 2021
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Indians charged for running fraudulent investment scheme in US

Two Indians have been charged by US authorities for running an alleged high-yield investment scheme through which they sought to exploit investors by pervasive social media pitches on Facebook, YouTube and Twitter.

The Securities and Exchange Commission’s (SEC) Enforcement Division alleges that Mumbai resident Pankaj Srivastava and Hyderabad resident Nataraj Kavuri offered “guaranteed” daily profits as they anonymously solicited investments for their investment management company called Profits Paradise.

The two invited investors to deposit funds that supposedly would be pooled with money from other investors and traded on foreign exchanges as well as in stocks and commodities.

They created a website and related social media sites to describe the profits as “huge,” “lucrative”, and “handsome”, and they characterised the risk as “minimal”.

SEC alleges that the guaranteed returns were false and that the investments being offered bore the hallmark of a fraudulent high-yield investment programme.

Srivastava and Kavuri attempted to conceal their identities by supplying fictitious names and contact information when registering their company’s website address.

They communicated under the fake names of “Paul Allen” and “Nathan Jones”. After the SEC began its investigation into the investment offering, the company website was discontinued.

“Srivastava and Kavuri used excessive secrecy in their effort to swindle investors through social media outreach and a website that attracted as many as 4,000 visitors per day,” said Stephen Cohen, Associate Director of the SEC’s Division of Enforcement.

“Our investigation stopped the constant solicitations once the website disappeared, and successfully tracked down the identities of the perpetrators behind those fraudulent solicitations,” he said.

Srivastava, a software engineer-turned-internet marketer, directed the scheme. At his request, his friend Kavuri took the lead in designing and marketing the Profits Paradise website.

In addition to the website, the two utilised Facebook, YouTube and other social media in an effort to lure investors.

According to the SEC’s order instituting administrative proceedings, Srivastava and Kavuri used the Profits Paradise website and YouTube videos to detail three investment plans.

Postings on the company’s Facebook page promised investors they could “Enjoy Hassle Free Income” and advertised a “5 per cent Referral Commission”.

The SEC alleges that Srivastava and Kavuri violated the provisions of the Federal Securities Act and will litigate the matter before an administrative law judge.

“We urge investors to exercise extreme caution if they are approached to invest in a website promising incredible returns with minimal or no risk. So-called high-yield investment programmes are often frauds,” said Lori J Schock, Director of the SEC’s Office of Investor Education and Advocacy.

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