An Indian-origin investment advisor in the US has pleaded guilty to perpetrating a USD 9 million investment fraud scheme involving Facebook stock.
Gignesh Movalia, 40, a registered investment advisor in Florida, pleaded guilty before US Magistrate Judge Anthony Porcelli of the Middle District of Florida to one count of investment advisor fraud.
Movalia, who was the founder and manager of OM Global Investment Fund, will be sentenced at a later date, Assistant Attorney General Leslie Caldwell of the Justice Department’s Criminal Division said.
According to admissions made in connection with his guilty plea, Movalia began soliciting investments for the OM Global Fund around 2011 by, among other methods, touting access to pre-initial public offering (IPO) shares of Facebook.
He admitted that, by the end of 2012, he had raised more than USD 15 million for the OM Global Fund, and that more than USD 9 million of the amount raised was for “side pocket” investments, which Movalia represented were to be used exclusively for purchasing of Facebook shares.
Movalia further admitted that, contrary to these representations and unknown to “side pocket” investors, he used funds designated exclusively for the purchase of Facebook shares for other investments, which he concealed from the investors.
He also admitted that he made material misrepresentations and omissions to investors in order to mislead them about the nature and value of their investments in the OM Global Fund.
The OM Global Fund lost approximately USD 9 million before it went into receivership in September 2013.