A recent University of Georgia graduate was accused of running a Ponzi scheme out of his fraternity house, according to a complaint filed on Friday by the Securities and Exchange Commission.
Syed Arham Arbab, 22, was listed as the defendant in a complaint filed in the U.S. District Court for the Middle District of Georgia, along with two companies he owned and operated — Artis Proficio Capital Investments, LLC and Artis Proficio Capital Management, LLC.
The complaint alleges that between May 2018 and May 2019, Arbab operated a Ponzi Scheme through a phony hedge fund — Artis Proficio — soliciting investments from fellow students, recent graduates and their family members. Instead of investing the funds, he transferred them to his private accounts.
According to the SEC, Arbab received no less than $269,000 from at least eight investors. Arbab used the funds for “more than $10,000 in cash withdrawals and more than $5,000 in hotel and nightclub expenses during a December 2018 gambling trip with friends in and around Las Vegas, Nevada,” the complaint reads.
The Georgia Corporations Division and the SEC complaint list the address of Artis Oficio as 558 W. Broad Street, the address of the Phi Kappa Tau fraternity house.
"We allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students. This is a reminder that investors of all ages and experience levels — whether long-time investors or recent graduates investing funds from their first few paychecks — should carefully research investment opportunities and the people offering them," said Richard R. Best, Regional Director of the SEC’s Atlanta Office, in a June 3 press release.
Arbab solicited investors as recently as May 17, according to the complaint, even after he was aware of the SEC investigation. The SEC asked for emergency measures from the court, including freezing the assets of Arbab and his companies. Arbab continued to use the money for personal expenses in recent months, according to the complaint.
“From all of the accounts, he continued to divert investor funds for his own personal use, including bar and liquor store purchases, expenses at an adult entertainment club, and car trips via Uber. In March and April 2019, he paid expenses of over $5,000 for two additional gambling trips to Nevada,” the complaint reads.
When soliciting, the SEC claims Arbab targeted people “associated with UGA and earlier friends and associates.” In texts and emails, Arbab was said to have described Artis Proficio as “different because we target young investors/college kids.”
Arbab told investors that investments were guaranteed up to $15,000 and that the fund was earning returns “ranging between 22 and 56 percent,” the complaint alleges. This was accompanied with weekly spreadsheets sent to investors listing their return rates.
The SEC alleges funds were moved through wire transfers and applications like Zelle, Venmo, and Cash App. Arbab made Ponzi payments, using funds from new investors to pay those who wanted to withdraw, sometimes even using payment apps to have new investors unwittingly transfer funds directly to old investors.
According to the complaint, Arbab also sold bond agreements that the SEC compared to promissory notes — he claimed they were short-term investments that would receive a fixed rate of return.
Even Arbab’s academic credentials were challenged in the complaint. The SEC accused Arbab of lying to investors by claiming he had already received an undergraduate degree from UGA before he graduated, as well as a false claim that he was now enrolled in “a one-year Master of Business Administration at the Terry College of Business with a focus on finance,” as the Artis Proficio website states. According to his LinkedIn page, Arbab studied cell biology and anatomy at UGA.
In addition to transferring funds for “Artis Oficio” into his personal accounts, Arbab also invested them in a personal brokerage account, albeit unsuccessfully, the SEC claims. The complaint says Arbab lost more than $300,000 through options trading between September 2018 and late March, when the account was closed with a balance of about $350.
Greg Trevor, executive director for media communications at UGA, said Arbab indeed graduated in May but was not enrolled in the Terry MBA program, matching the SEC’s claims. The university cooperated fully with the investigation, he added.