In Manhattan, prosecutors are charging Fred Elm, the founder of Elm Tree Investment Advisors LLC, and Ahmed Naqvi, its COO, of running a $17M Ponzi scam that allegedly bilked over 50 investors. According to the government, the two men falsely claimed they had access to pre-initial public offerings and that their funds would be placed in privately held companies, such as Uber Technologies and Twitter Inc.
Manhattan U.S. Attorney Preet Bharara said that only $7.1M of the $17M was actually invested and investor funds were mixed together in one account. Elm is accused of spending millions of these dollars in expensive purchases, including high-end cars and a nearly $2 million home.
Investors were told that Elm and Naqvi would receive a 2 % management fee and 20% of any profit made. Unfortunately, there never was any profit. $5.2M of new investors’ funds was used to pay earlier investors, which is typical of a Ponzi scam. The two men are accused of making misrepresentations that were fictitious to hide their scheme from investors.
Elm and Naqvi are charged with wire fraud, securities fraud, and conspiracy.
It was just last month that Elm settled a civil case filed against him by the Securities and Exchange Commission. The regulator accused him of misappropriating at least $2M of investor funds related to the $17M scam. Elm has settled the securities lawsuit.
Over the years, Shepherd Smith Edwards and Kantas, LTD LLP has investigated numerous Ponzi fraud claims in which our clients have sustained significant losses. We are here to help investors recover money lost because of negligence, fraud, and other wrongdoing. Our securities law firm has helped clients recoup over $100M through negotiation, litigation, mediation, and arbitration.
Read the SEC Complaint (PDF)
Elm Tree Investment Executives Charged In $17 Million Fraud, Financial Advisor, April 14, 2016