Two Criminal Investment Fund Fraud Actions
Despite massive publicity and numerous cases by enforcement authorities, investment fund fraud actions continue to be a staple of the SEC, CFTC and the DOJ. In case after case investors are convinced to part with their hard earned cash, trusting those who claim to have a safe path to large profits. That path only generates profits for the promoters, however, not the investors. Two recent examples are U.S. v. Ekdeshman, No. 1:14-cr-00427 (S.D.N.Y.) and U.S. v. Lakian, No. 1:15 Cr-0043 (E.D.N.Y.).
Alex Ekdeshman was the CEO of Paramount Management, LLC. Over a two year period beginning in May 2011 the firm solicited investors. The firm claimed to be investing in foreign exchange currency transactions or forex from its offices in New York City. Investors were assured their money would only be invested in forex.
About 115 investors put $1.58 million into Paramount Management. Unfortunately, about two thirds of the money was never put into the currency markets. Rather, Mr. Ekdeshman invested the funds in himself, his family and his other business expenses as well as firm employees. As a result the investors lost their funds. Mr. Ekdeshman pleaded guilty to one count of commodities fraud. He is awaiting sentencing. See also CFTC v. Ekdeshman, Civil Action No. 1:13-cv-04436 (S.D.N.Y.). Mr. Ekdeshman is awaiting sentencing.
The Lakian action involved two schemes perpetrated by John Lakian and Diane Lamm, according to the charging papers. The schemes ran over a four year period beginning in early 2009. In the first $11 million was raised. Investors were promised that their funds would be used to purchase, consolidate and sell registered investment advisory businesses. Again, however, much of the investor money was invested in the promoters. Specifically, the money was used to pay Mr. Lakian’s home mortgage and for other expenses.
The second scheme involved the management of funds for about 100 investors in a North Carolina based investment fund. When the fund was liquidated the proceeds were supposed to go to the investors. Again the money went to the promoters – Mr. Lakian and Ms. Lamm for restaurant businesses they controlled. The two defendants were also charged with obtaining more than $8 million in bank loans using forged and fraudulent documents. The defendants were charged with conspiracy to commit securities, wire and bank fraud and two counts of substantive securities fraud. The cases are pending.