$1.4M fraud scheme paid for luxury cars, SEC says
An unregistered advisor with little investing experience raised $1.4 million from family and friends and squandered the money on bad investments and a lavish lifestyle, federal prosecutors say.
Amrit Chahal, 30, is charged with fraud for an investment scheme that used forged documents and fictitious statements to solicit funds from about 50 individuals from 2015 to 2018, according to federal court documents filed in Virginia. Chahal also used a website and a LinkedIn profile, among other venues, to claim to be a successful trader who managed $5 million in client assets through his unregistered investment firm, Kane Capital Investment. He claimed he could generate above-market returns of 28% to 34%, prosecutors say.
Chahal created and sent clients false account statements exhibiting inflated returns, which prompted some clients to invest even more money in his fraudulent investment scheme, prosecutors say.
For example, Chahal raised at least $430,000 from investors by the end of 2015 and transferred approximately $207,000 into a brokerage account in the name of Kane Capital, prosecutors say. He suffered trading losses of approximately $178,000, or 86% of his clients’ investments. Instead of making clients aware of the losses, he raised an additional $1 million from clients, prosecutors say.
In parallel enforcement, the CFTC charged Chahal with fraud and illegally commingling funds, among other complaints, the agency says. Chahal’s commodity pools illegally traded in volatility indexes and crude oil futures contracts, among others, and was “on balance” unprofitable, according to federal court documents also filed in Virginia.
In 2016, unsuccessful futures trading caused one account to lose 98% of its $20,000 in net deposits that year, prosecutors say.
“As losses mounted, [Chahal] created a mirage of profitability by making material misrepresentations and omissions to pool participants and by doctoring trading account statements to fraudulently reflect profits that did not exist,” according to the CFTC complaint.
The SEC alleges Chahal used some of the money — including returns from clients’ investment — for his own personal benefit like paying for his luxury car, rent, travel, dining and other living expenses, as well as payments to clients in a “Ponzi-like manner,” prosecutors say.
Chahal or representatives of Kane Capital could not be reached for comment. No attorney was listed in the court documents.
Chahal has never held any securities licenses, nor has he ever been associated with a registered broker-dealer or investment adviser other than Kane Capital, prosecutors say.
The SEC is seeking a permanent enjoinment, civil penalties and disgorgement, according to court records.