The U.S. Securities and Exchange Commission (SEC) is accusing a California entrepreneur and his companies of executing a multi-million dollar Ponzi scheme.
The SEC says Satish Appalakutty and his businesses, Lorven Funds and Lorven Advisors LLC, drained $37 million from over 100 people.
Prosecutors say that between the start of 2019 through March 2024, Appalakutty solicited people from a Hindu temple and misrepresented how he would use potential investors’ funds.
He claimed he would use their cash to buy well-known stocks at a discounted price, purchase equity in private firms that have yet to launch initial public offerings (IPOs) or otherwise invest the funds in a way that would generate returns for the investor.
The SEC says Appalakutty falsely told the investors he would yield them minimum rates of 8% to 62.5% annually. However, instead of purchasing stocks, he used the money for his own personal benefit, to pay off other investors and to fund his software startup firm Vistalytics Inc.
The SEC has filed a civil complaint against Appalakutty and his entities in the U.S. District Court for the Northern District of California.
The charges allege violations of the antifraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, for defrauding investors with false promises of high returns on fictitious investments.
The SEC is also looking to ban Apallakutty from acting as or being associated with any investment advice, fine him civil penalties and permanent injections against all defendants.
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