gavel enforcement regulators

U.S. securities regulators say that they have taken down an alleged Ponzi scheme being operated out of a frat house at the University of Georgia.

The U.S. Securities and Exchange Commission (SEC) brought an emergency action in a federal court in Georgia seeking an asset freeze, a restraining order and other relief in the scheme allegedly operating in Athens, Ga.

The SEC’s complaint alleges that Syed Arham Arbab, 22, offered investments in a purported hedge fund called Artis Proficio Capital and promised investors a fixed rate of return. The regulator alleges that the scheme raised more than US$269,000.

The hedge fund doesn’t exist, the performance claims were fictitious and Arbab didn’t invest the money as promised, the regulator says.

Instead, the SEC says, investors’ funds were diverted for Arbab’s own use and to repay other investors. The allegations have not been proven.

“We allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students,” said Richard Best, director of the SEC’s Atlanta office.

“This is a reminder that investors of all ages and experience levels — whether long-time investors or recent graduates investing funds from their first few paycheques — should carefully research investment opportunities and the people offering them,” he added.

The SEC’s complaint charges Arbab, Artis Proficio Capital Investments LLC and Artis Proficio Capital Management LLC with violating the antifraud provisions of federal securities laws. Along with relief, it is seeking the return of any ill-gotten gains, with interest, and civil penalties.