Indian man, 23, arrested in Alabama over Ponzi scam worth $4,00,000

A young man from India has been indicted in Alabama in a case of Ponzi scam worth $4,00,000. 23-year-old Pathyam Patel, of Gujarat’s Gandhinagar, has been accused of starting to sell securities and collecting money after guaranteeing massive returns. However, he never invested this in securities, but used them only for his personal expenses.
Officers of Alabama Securities Commission (ASC) confirmed that Patel, also known as Pat Patel, was staying in Alabama. He was arrested on March 6 based on as many as nine counts of securities law violations, according to Times of India.
“The indictment alleges that Patel sold in excess of $4,00,000 in investment contracts to at least six investors. Patel represented that he was associated with Infinity Wealth Management, an investment advisory firm, which he claimed was registered with the US Securities and Exchange Commission,” ASC said in a statement.
Patel said that he managed to earn a lot of profits for investors by investing their funds. He also guaranteed that there would be no loss of their principal amount. Patel, after getting his hands on the investors’ funds, told investors that they were required to pay additional fees in order to maintain their investments.
“Patel did not invest the funds as communicated to the investors. Instead, he used them for gambling on sporting events, personal expenses and paying other investors. Patel had no ability to guarantee that the investors would not lose their principal (amount),” the statement added.
When Patel ran the scam, he was not even registered with the ASC to sell securities in Alabama. The investment contracts sold by Patel were not registered with the ASC either. Infinity was neither a registered investment advisor, nor broker-dealer, the statement said.
Investor.gov describes the Ponzi scheme as “an investment fraud that pays existing investors with funds collected from new investors.” “Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay those who invested earlier and may keep some for themselves,” it adds.