New York Securities Lawyer Blog
On June 2, 2015, San Diego stock broker, Sunil Sharma (“Sharma”) pleaded guilty to stealing more than $6 million in customer funds through a Ponzi-scheme. Specifically, Sharma pleaded guilty to wire fraud, a violation of 18 U.S.C § 1343, and faces up to 20 years imprisonment and a fine of $250,000, or twice the pecuniary loss or gain from the offense, plus restitution to the victims. The FBI issued a press release covering the plea, which may be found here.
The court documents revealed that Sharma once held a Series 7 license; however, he voluntarily gave that license up in 2001 after he, and many of his clients, lost funds during the 2001 market crash. In 2002, Sharma began selling insurance and annuities to his clients. In 2007, after attending an “Investools” workshop on options trading, Sharma set up Gold Coast Holding, LLC (“Gold Coast”) as a vehicle for his options trading.
After some initial “beginner’s luck” with $50,000 of his own funds, Sharma developed a scheme whereby he would convince his existing clients that they could earn between 5%-6% by allowing him to day-trade their money and then Sharma could pocket any excess he earned. In an effort to procure investors Sharma falsely stated that Gold Coast was a safe way to earn monthly retirement income because investors’ funds would be: 1) part of a diversified portfolio; 2) pooled with many other investors; 3) used to buy bonds from emerging markets and; 4) managed by Goldman Sachs. Additionally, Sharma urged his customers to liquidate their insurance investments, including annuities containing high surrender charges.
According to court documents, from January 2008 to November 2014, Sharma raised approximately $8.36 million from investors in furtherance of his scheme. However, Sharma was not successful with his day-trading strategy. By the end of 2009, Sharma had lost approximately $3.25 million of the $3.5 million he raised from his initial investors. Thereafter, Sharma began paying earlier investors returns from approximately $5 million raised from later investors in a Ponzi-like manner. Additionally, Sharma illegally diverted investor funds towards personal expenses, including: 1) approximately $700,000 towards the down payment of a home; 2) approximately $12,000 for a cruise and; 3) further funds paid to lease luxury cars.
The securities fraud lawyers at Lax & Neville LLP represent customers who are victims of Ponzi-schemes. If you invested with Gold Coast Holding, LLC, contact Lax & Neville today at (212) 696-1999.