A former University of Georgia student who ran a $1 million Ponzi scheme out of his fraternity house was sentenced to five years in prison Friday, according to a news release from the Middle District Court of Georgia. Syed Arham Arbab, who ran the scheme out of the Phi Kappa Tauhouse on West Broad Street, defrauded around 117 investors between May 2018 and May 2019.
Arbab’s sentence of five years is the maximum prison sentence allowed under the law, and he will have three years of supervised release after his time in prison, the release said. There is no parole in the federal system. He was also ordered to pay around $500,000 in restitution.
Arbab collected $1 million in investments while running the scheme, some from fellow UGA students and their families. He solicited around 117 investors to invest in his fake hedge funds, Artis Proficio Capital Management and Artis Proficio Capital Investments, the release said.
He said he spent investor funds on personal expenses, “including clothing, shoes, retail purchases, fine dining, alcoholic beverages, adult entertainment and interstate travel, including spending thousands of dollars gambling during three trips to Las Vegas in 2018,” according to the release.
Arbab fabricated account statements that misrepresented the fund’s returns, number of investors, total investments and the nature of investment plays being made, according to the release. He promised rates as high as 22% or 56% and a guarantee on the first $15,000 invested. Arbab admitted he didn’t have the liquid capital to pay investors back, but did not disclose this to the investors.
Arbab falsely told prospective investors that he was pursuing an MBA at UGA’s Terry College of Business. He was rejected from UGA’s MBA program and was operating the fund entirely from his fraternity house, according to the release. He also said a “famous NFL player and UGA alumnus” had invested in the fund, which was untrue.
“Arbab’s lies and deceit to profit personally from the hard-earned money of investors, many of them fellow students, were unconscionable,” said Chris Hacker, special agent in charge of FBI Atlanta, in the release. “The victims will never recover their losses. It is a stark reminder to investors to be extremely careful where they entrust their money and be skeptical of offers that sound too good to be true.”