President of Investment Fund Pleads Guilty in Manhattan Federal Court to Perpetrating $2 Million Ponzi Scheme
|U.S. Attorney’s Office November 09, 2012|
Preet Bharara, the United States Attorney for the Southern District of New York, and Randall C. Till, the Inspector in Charge of the New York Division of the U.S. Postal Inspection Service (USPIS), announced today that Anand Sekaran, the president and director of Wasson Capital Ltd. (Wasson), an investment fund, surrendered and pled guilty today in Manhattan federal court to engaging in a $2.3 million fraudulent scheme to defraud Wasson’s investors. Sekaran misled Wasson investors concerning the fund’s value, distributed funds to investors that were contributed from other investors, and issued fraudulent account and fund performance statements. He pled guilty today before U.S. District Judge Robert P. Patterson.
Manhattan U.S. Attorney Preet Bharara stated, “We’ve seen far too many of the classic Ponzi schemes perpetrated by the likes of Anand Sekaran that cheat and rob investors. Like so many defendants before him, Sekaran’s shell game with other people’s money finally caught up with him, and he will now face justice.”
New York USPIS Inspector in Charge Randall C. Till said, “Postal inspectors will aggressively investigate and bring to justice anyone who uses the U.S. mail to fraudulently enrich themselves at the expense of investors. Today’s guilty plea by Mr. Sekaran is another example of greed overcoming honest business practices.”
According to the information and statements made during the guilty plea proceeding:
In 1997, Sekaran formed Wasson as an asset management firm in New York, New York, that would invest client money primarily in the U.S. options market, and he solicited investors from 1999 through 2010. As a result of both the substantial losses Wasson incurred and several redemption requests, Sekaran engaged in a scheme to defraud investors, divert investor funds, and perpetrate a Ponzi scheme through two methods from 2009 through June 2011.
First, Sekaran misrepresented to existing and potential investors Wasson’s investment value and past performance, the ways investor funds were being used, and the source of funds distributed to investors who had requested redemptions. Specifically, Sekaran misrepresented that Wasson was stable and doing well so that he could secure additional contributions. In response to certain investor redemption requests, Sekaran also used money from other investors to pay off the redeeming investors.
Second, Sekaran distributed fraudulent statements to investors in order to forestall redemption requests, induce new investors to contribute to Wasson, and induce existing investors to provide additional contributions. For example, Sekaran caused misleading and fabricated account statements to be sent to several Wasson investors that falsely inflated the value of their investments. He also created and distributed fraudulent performance statements purporting to show that the Wasson fund was performing well, when, in fact, it was suffering losses.
In the course of his scheme, Sekaran misappropriated approximately $500,000 of investor funds. As a result of his conduct, more than 10 investors lost a total of approximately $2 million.
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Sekaran, 44, of Miami, Florida, pled guilty to one count of securities fraud and one count of mail fraud. The securities fraud and mail fraud charge each carry a maximum term of 20 years in prison. Sekaran also faces a maximum fine of $5 million. As part of his plea agreement, Sekaran agreed to pay $2.3 million in restitution and forfeit for the proceeds obtained as a result of the offense. He is scheduled to be sentenced by Judge Patterson on February 19, 2013.
Mr. Bharara praised the investigative work of the Criminal Investigators of the United States Attorney’s Office and the USPIS, which jointly investigated this case. He also thanked the Securities and Exchange Commission for its assistance.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney David I. Miller is in charge of the prosecution.