By Joe Johnson
A former University of Georgia undergraduate student who operated a Ponzi scheme that collected approximately $1 million in investments and defrauded 117 investors that included fellow students and their families, was sentenced to five years in prison Friday morning, the maximum prison sentence allowed under the law, according to Charlie Peeler, U.S. Attorney for the Middle District of Georgia.
Syed Arham Arbab, 23, of Atlanta, was sentenced to five years in prison followed by three years of supervised release by U. S. District Judge C. Ashley Royal. There is no parole in the federal system.
Additionally, the judge ordered Arbab to pay $509,032.12 in restitution. Arbab pleaded guilty on October 11, 2019 to a one-count information charging him with securities fraud.
"Arbab preyed on unexperienced investors, including his own fellow students, by weaving a despicable web of lies to steal from people who trusted him," Peeler said. "Arbab lied about pursuing a MBA, lied about having the support of a famous UGA grad, lied about the amount of capital he raised and lied about what he was doing with investors’ money."
Peeler said, "Arbab is not some sloppy bookkeeper. He never had the capital to back up the phony returns he promised investors. Arbab took other people’s money and spent it on lavish trips to Las Vegas, expensive clothing, fine dining, adult entertainment and luxuries for himself."
Assisting in the investigation were the FBI and the U.S. Securities and Exchange Commission.
"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. "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."
Arbab reportedly admitted 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. Arbab’s illegal activities occurred between May 2018 through May 2019, while he was enrolled as an undergraduate student at UGA and a member of the Phi Kappa Tau fraternity.
Authorities said that Arbab solicited investors to invest in his hedge funds, Artis Proficio Capital Management and Artis Proficio Capital Investments, which collectively were called APC.
Arbab made several misrepresentations in order to persuade victims to invest with him. He fabricated account statements, misrepresenting the fund’s returns, the number of investors, and the total funds invested as well as the nature of the investment plays being made. Victims invested approximately $1 million with Arbab during his scheme, with Arbab falsely promising rates of returns as high as 22 or 56 percent, when his overall returns were nowhere near these amounts. Arbab offered some investors a seemingly risk-free “guarantee” on the first $15,000 invested, and the majority of investors, especially those who were students or younger professionals, invested less than this amount, believing that even if Arbab’s investment choices proved unsound or the market behaved unpredictably, they would still be paid back their entire principal investment. Arbab admitted that knew he did not have the liquid capital to make good on these guarantees when he made them, but he did not disclose this to his investors.
Arbab continued to deceive victims after he learned that some prospective investors were UGA football fans, telling them a famous NFL player and UGA alumnus was an investor in the fund, when in fact the football player had never invested with APC. Arbab also misrepresented that he was an MBA candidate at UGA’s Terry College of Business, when in fact he had been rejected by UGA’s MBA program and was operating the fund primarily from his fraternity house as an undergraduate.