A cell biology and genetics student at the University of Georgia ran a $ 1 million Ponzi scheme out of his fraternity house, tricking 117 people into investing in their fake hedge funds and then spending their money on alcohol, gambling and strip clubs.
Syed Arham Arbab, a 22-year-old from Augusta, pleaded guilty Friday to U.S. District Court in the Georgia Central District for securities fraud.
Arbab admitted that from May 2018 until his May 2019 confirmation, he lied to dozens of investors, including fellow students, to get them involved in the alleged "hedge funds" he called Artis Proficio Capital Management and Artis Proficio Capital Investments, according to a press release from the Department of Justice.
Arbab said he collected $ 1[ads1] million by producing bank statements, the nature of the investments and the total number of funds invested. He also promised risk-free “guarantees” on rates of return of up to 22 percent or 56 percent, according to federal prosecutors.
"Arbab admitted to knowing that he did not have the liquid capital to make good on these guarantees when he gave them, but he did not disclose this to his investors," the DOJ press release states.
Arbab also admitted in court that he told investors he received an MBA from the school's Terry College of Business and that a famous NFL player and UGA alum had put money into the fund. In fact, Arbab was rejected from UGA's MBA program, and the footballer had never invested in his fund.
He eventually spent the money he had from car cats from investors on clothing, shoes, fine dining, alcohol, strip clubs and three money trips to Las Vegas, prosecutors said.
Many of the allegations made by Arbab on Friday were first referred to in a complaint filed by the department in May. The agency assisted the FBI in its investigation, according to the press release.
He is scheduled to be sentenced in January 2020.