A young Indian man arrested has been indicted in Alabama for a $4,000,000 Ponzi scheme. Pathyam Patel, 23, of Gujarat’s Gandhinagar, has been accused of starting to sell securities and collecting money after promising huge returns. However, he never invested in securities and instead used them for personal expenses.
Officers from the Alabama Securities Commission (ASC) confirmed that Patel, also known as Pat Patel, was staying in Alabama. He was arrested on March 6 for up to nine counts of securities law violations, according to The Ultimate News.
What is Pathyam Patel Accused of?
“The indictment alleges that Patel sold in excess of $4,00,000 in investment contracts to at least six investors. Patel represented that he was associated with Infinity Wealth Management, an investment advisory firm, which he claimed was registered with the US Securities and Exchange Commission,” ASC said in a statement.
Patel stated that he was able to generate significant profits for investors by investing their funds. He also guaranteed that they would not lose their principal amount. After receiving the investors’ funds, Patel informed them that they would be required to pay additional fees in order to maintain their investments.
“Patel did not invest the funds as previously communicated to investors.” Instead, he used them to gamble on sporting events, cover personal expenses, and pay other investors. Patel was unable to guarantee that the investors would not lose their principal (amount),” the statement continued.
Investor.gov defines the Ponzi scheme as “an investment fraud that pays existing investors with funds collected from new investors.” “Ponzi scheme organizers frequently promise to invest your money and generate high returns with little or no risk. However, in many Ponzi schemes, the fraudsters do not invest any money. Instead, they use it to pay off previous investors and may keep some for themselves,” it adds.