Indian fund manager Neal Goyal charged with stealing $11 mn in Ponzi scheme from investors in the US

Written by PTI | New York | Updated: May 30 2014, 17:37pm hrs
Ponzi schemeFrom the beginning of his scheme, Neal Goyal lied to investors and created fake account statements: SEC (Reuters)
An Indian investment fund manager has been charged with fraudulently obtaining more than 11 million dollars from investors and misusing the money for his own benefit, including lavish personal and business expenses.

Neal Goyal, 33 was charged with one count of wire fraud in a criminal information filed yesterday in US District Court.

The US Securities and Exchange Commission (SEC) has filed a parallel civil fraud lawsuit against him and obtained a court order freezing his assets and funds.

Goyal could face a maximum penalty of 20 years in prison and a 250,000 dollar fine if convicted.

According to the criminal case, the accused obtained more than 11.3 million dollars between 2006 and 2014 from 41 investors through offering and selling limited partnerships in four private funds that he managed and controlled.

Neal Goyal's investment strategy lost money from the outset, but he concealed the losses from investors through Ponzi payments and phony account statements that grossly overstated the performance of the funds.

He told investors that the funds would be used for long and short trading in equities, options and other securities.

"From the beginning of his scheme, Neal Goyal lied to investors and created fake account statements portraying positive trading returns in order to gain their trust and attract additional investments," said SEC's Chicago Regional OfficedirectorDavid Glockner.

The SEC suit alleges that Goyal stole his investors' money to fund his own lavish lifestyle, make down-payments on two homes he purchased, buy artwork and lavish furniture, pay business expenses and support a variety of personal business ventures, including a bar and two children's clothing boutiques that his wife operates in Chicago.

It said Goyal did little trading and simply operated a Ponzi scheme that used new investor funds to pay redemptions to existing investors.

"Goyal's limited trading was unsuccessful, and he stole the vast majority of the money he raised," it said.

The SEC is seeking financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and a permanent injunction against Goyal and the funds he operated.

A federal judge has issued a permanent injunction and asset freeze against Goyal and his firms, who consented to the order without admitting or denying the allegations in the SEC's complaint.