Unlicensed Investment Adviser Sentenced to 64 Months in Ponzi Scheme
A 37-year-old Brighton man was sentenced today in federal court to 64 months in prison for running a $3.8-million Ponzi scheme, United States Attorney Barbara L. McQuade announced.
Joining in the announcement was Paul M. Abbate, Special Agent in Charge of the Federal Bureau of Investigation.
U.S. District Judge Nancy G. Edmunds sentenced Sachin Uppal today, following his August guilty plea to wire fraud charges. According to court documents, Uppal ran the Jefferson Smith Trading Company LLC (“JSTCO”) from July 2007 through September 2013. Uppal, who was not a licensed investment advisor, marketed JSTCO to potential investors and solicited investor funds, describing it as a “hedge fund.” Uppal told investors that he was a “day trader,” who would use investor funds to buy and sell financial instruments within the same trading day, which he said would reduce risk to investors.
Several of Uppal’s victims were family friends. This phenomenon, known as ‘affinity fraud,’ often targets members of identifiable groups, such as a religious or ethnic communities or clubs. Judge Edmunds ordered Uppal to pay restitution to his victims in the amount of $3,867,187.
Uppal promised a return of 18 to 20 percent per year, with a minimum investment commitment of only 12 months. Once he secured the initial investment, Uppal e-mailed his victims false monthly “year-to-date investment summaries” to make them believe that their accounts were performing well, and to persuade them to invest additional funds. Sometimes, Uppal traded and lost funds during the relevant period. Other times, Uppal simply pocketed the money without conducting any trades at all. When investors asked to close their accounts and withdraw their investment funds, Uppal attempted to lull them with various excuses.
“Some people use guns to steal money. Other people use lies,” McQuade said. “Investors should not be lulled into trusting an investment advisor just because they know him or because he is a fellow member of an organization to which they belong. Criminals take advantage of those relationships as cover to commit fraud.”
“Mr. Uppal took advantage of trusting relationships with family, friends, and associates, breached their confidence, and stole their money,” stated Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Criminals like this use every means of deceit available to further their selfish goals, and investors need to exercise great caution so as not to become victimized.”
Investors are encouraged to consult with the Financial Industry Regulatory Authority (FINRA) website (http://www.finra.org) and its BrokerCheck resource before investing.
The case was investigated by the FBI and prosecuted by Assistant United States Attorney Erin Shaw.