Security & Fraud

$10M Ponzi Scheme Arises In Silicon Valley

Ponzi scheme in Silicon Valley

Silicon Valley is not just the home to startups and angel investors but also, apparently, some bad apples.

As reported by Courthouse News Service last Friday (May 27), a number of investors based in Southern California were bamboozled out of $10 million through a ruse that was based on promises of buying pre-IPO shares in companies, including marquee names such as Airbnb and Uber.

But according to the SEC, the alleged schemers — identified by the site as running a Ponzi scheme — include Jaswant S. Gill and Javier Rios. Those two defendants run JSG Capital Investments, along with two JSG affiliates. The SEC, noted Courthouse News Service, has called the scam "a classic investment scam and Ponzi scheme." Of the $10 million bilked, less than 1 percent was spent on shares, and none of those shares belonged to the aforementioned tech juggernauts.

The scheme extended across more than 200 investors, according to the SEC. The regulatory agency also stated that it sought an emergency injunction against the two men as their actions seemed to continue. In the complaint, the SEC stated that Gill’s age is unknown due to multiple birth dates and Social Security numbers. Gill, said the agency, took $1 million from his victims in cash, and Rios took another $1.7 million. Together, they spent another half a million dollars on excursions and took $4.2 million to keep the Ponzi scheme afloat. In addition, Gill listed professional achievements that were falsified, said the SEC.

The SEC is looking to have the pair’s assets frozen, an accounting performed and penalties levied for securities violations.

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