Fmr Student Admits Running Ponzi Scheme from Fraternity House at UGA

More than 100 People, Including Fellow Students and Their Families, were Victims of the Scheme

A former University of Georgia undergraduate student admitted to operating a Ponzi scheme which collected approximately $1 million in investments and defrauded 117 investors, including fellow students and their families.

Syed Arham Arbab, 22, of Augusta, pleaded guilty on Friday, October 11, 2019 to a one-count information charging him with Securities Fraud before United States District Judge C. Ashley Royal. In his guilty plea, Mr. Arbab admitted he spent investor funds on personal expenses, including clothing, shoes, retail purchases, fine dining, alcoholic beverages, adult entertainment and interstate travel, including spending thousands of dollars gambling during three trips to Las Vegas in 2018. Mr. Arbab faces a maximum sentence of five years in prison, a $10,000 fine, three years supervised release and is subject to any restitution ordered by the Court. He will be sentenced on January 8, 2020 at 9:30 a.m. at the Federal Courthouse in Athens. There is no parole in the federal system.

“The defendant engaged in a pattern of deceit to gain the trust of unwitting investors who gave him their hard-earned money for what they believed was a sound investment. Instead of investing the victims’ money, the defendant funded a lavish lifestyle,” said Charlie Peeler, the U.S. Attorney for the Middle District of Georgia. “Our office is committed to protecting investors who are duped by fraudsters. I want to thank the FBI and the SEC for their efforts working together to bring justice for the victims.”

“Unfortunately this case is a stark reminder to investors to be very careful where they entrust their hard earned money, and always be skeptical of offers that sound too good to be true,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “The victims of this scheme, many of them students, will never recover their losses, but can rest assured that Arbab’s greed will not go unpunished.”

Mr. Arbab admitted that from May 2018 through May 2019, while enrolled as an undergraduate student at the University of Georgia, he solicited investors, many of whom were his fellow students, to invest in his entities, Artis Proficio Capital Management and Artis Proficio Capital Investments (collectively “APC”), which he told investors were “hedge funds.” Arbab admitted that he convinced approximately 117 investors in Georgia and other states to invest funds with him and APC.

Mr. Arbab made a number of misrepresentations in order to persuade victims to invest with him. The defendant also fabricated account statements, misrepresented the fund’s returns, the number of investors, the total funds invested and the nature of the investment plays being made. Victims invested approximately $1 million with Mr. Arbab in the course of his scheme, with Mr. Arbab falsely promising rates of returns as high as 22% or 56%, when his overall returns were nowhere near these amounts.  Mr. Arbab offered some investors a seemingly risk-free “guarantee” on the first $15,000 invested, and the majority of investors, especially those who were students or younger professionals, invested less than this amount, believing that even if Mr. Arbab’s investment choices proved unsound or the market behaved unpredictably, they would still be paid back their entire principal investment. Mr. Arbab admitted that knew he did not have the liquid capital to make good on these guarantees when he made them, but he did not disclose this to his investors. Further, when Mr. Arbab learned that some prospective investors were UGA football fans, he told them a famous NFL player and UGA alumnus was an investor in the fund, when in fact the football player had never invested with APC. Mr. Arbab also misrepresented that he was an MBA candidate at UGA’s Terry College of Business; in fact, he had applied to and been rejected by UGA’s MBA program and was operating the fund primarily from his fraternity house as an undergraduate.

Trial Attorney Katie Rasor, Assistant Chief Justin Weitz of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Lyndie Freeman of the Middle District of Georgia are prosecuting the case for the Government. The criminal investigation was conducted by the Federal Bureau of Investigation. Mr. Arbab is also the subject of a previously filed civil complaint by the Securities and Exchange Commission alleging a Ponzi scheme and offering fraud; the May 31, 2019, civil action is filed at 3:19-CV-00055. The Department of Justice appreciates the substantial assistance of the Enforcement Division of the Securities and Exchange Commission.

Individuals who believe that they may be a victim in this case, and are not receiving notifications, please contact the Fraud Section’s Victim Witness Specialist by calling the Victim Assistance phone line at 1-888-549-3945.