Neal Goyal, the former head of Caldera Investment Group and Blue Blue Horizon Asset Management, has been sentenced to six years behind bars for bilking over 40 investors of more than $9 million in a Ponzi scam. Prosecutors contend that over the eight years that the 34-year-old ran the scam, pretending to be a hedge fund manager, he made just limited trades and on only some of the funds. The majority of his victims were family and friends from his Hindu community.
Goyal told investors that the four private funds he managed would employ a long-short trading strategy. Instead, he ran a Ponzi scam, paying off earlier investors with new investors’ money.
He would go on to use over $2 million of their funds on his lavish lifestyle, including a $1.5 million home, luxury car leases, travel, and expensive dinners. He also put some of the money into his wife’s business ventures and his father-in-law’s failing tavern. He took his company staff on an all-expenses-paid vacation to the Dominican Republic. The group trip included a yacht and butler service at a five-star resort.
In February, Goyal pleaded guilty to wire fraud. He was ordered to pay $9.2 million in restitution.
It was last year that the SEC filed a complaint against Goyal, accusing him of lying to investors and issuing fake account statements that showed positive trading returns despite limited trades and poor results. The regulator said he raised over $11.4 million from investors by promoting his fraudulent “long-short” trading strategy.
The Commission said that Goyal concealed his scam through his Ponzi payment plan and by generating fake accounts statements that touted positive returns. He settled that case without denying or admitting to the civil charges.
Shepherd Smith Edwards and Kantas, LTD LLP is a securities law firm.
6 years in prison for hedge fund trader in Ponzi scheme, Chicago Tribune, July 2, 2015
Read the SEC Complaint (PDF)
Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014