The former head of a U.S. investment firm who fled to Canada while on bail has now pleaded guilty to securities fraud and conspiracy charges in New York.

Fred Elm, the founder of Elm Tree Investment Advisors LLC, pleaded guilty to one count of securities fraud and one a count of conspiracy in connection with a scheme to defraud investors by promising to invest in pre-IPO securities of private tech giants, such as Twitter, Uber and Alibaba.

According to U.S. authorities, Elm Tree didn’t have access to those pre-IPO shares. Instead, about US$7.1 million of the US$18 million raised from investors was deployed in money-losing trading.

Investor funds were also diverted to finance extravagant personal expenses, and to repay earlier investors in the scheme.

U.S. authorities said investors were provided with fictitious account statements indicating that the trading strategies were generating positive returns.

Elm fled to Canada in 2017 before he was scheduled to enter a plea in court. He was extradited back to the U.S. earlier this year. Now that he has pleaded guilty, Elm is due to be sentenced on Aug. 7.

“Elm and his co-defendant Ahmed Naqvi lied about their access to pre-IPO investments, and they invested only a portion of the funds in money-losing trades and spent the rest on their own extravagant lifestyles, including a Bentley, a Maserati, and a Range Rover,” said Geoffrey Berman, U.S. attorney for the Southern District of New York.

Naqvi also fled to Canada and was extradited in November 2019. He pleaded guilty to his role in the scheme earlier this month.