SEC Freezes Ponzi-Like Scheme by Capital Fund Manager in Twitter Stock Sales

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SEC Freezes Ponzi-Like Scheme by Capital Fund Manager in Twitter Stock Sales

The SEC alleges a venture capital fund manager stole funds from one account to cover lost profits in another account in a Ponzi-like act.  The capital fund manager, Gregory Gray, Jr., and his firms, Archipel Capital LLC and BIM Management LP, are charged with stealing money from three investment funds to pay fabricated returns to investors in a separate fund.

Gray created the separate fund to purchase pre-IPO shares of Twitter that would be sold after the company went public.  The profits would then be delivered to investors.  Gray’s solicitation raised almost $5.3 million from initial investments, which was enough money to buy 230,000 pre-IPO shares of Twitter at the time Gray received the funds, according to the terms of the offering documents Gray signed.  However, Gray purchased only 80,000 pre-IPO shares before November 2013, when Twitter went public.  When investors requested their promised shares and profits from Gray, he delayed in response and stole funds from unrelated accounts to make up the difference in profit.

Gray allegedly stole the majority of the money to make fraudulent payments in Ponzi scheme form.  The money was stolen from one investor, whom Gray told he had purchased $5 million worth of stock in Uber Technologies.  Gray then fabricated a document using the signatures of a prior legal stock purchase agreement for shares in a different company in order to convince the investor his money had been invested in Uber stock.  However, Gray never used any of the money to purchase Uber stock.  Instead, the proceeds were distributed to investors pressuring Gray to deliver their Twitter profits.

Andrew Calamari, a Regional Director with the SEC, said of the investigation, “Gray sold investors on a seemingly great idea to acquire pre-IPO shares of high-profile companies like Twitter and Uber at a low price.  But rather than come clean when he failed to invest as promised, Gray stole from investors to cover his misdeeds.”

The SEC successfully obtained an asset freeze to stop future Ponzi scheme activity.  The complaint charges Gray and his firms with violating rules in the Securities Act of 1933, Securities Exchange Act of 1934, Investment Advisers Act of 1940, and Exchange Act.  The SEC seeks permanent injunctions and disgorgement against all defendants, a financial penalty, and preliminary relief and a temporary restraining order.  The SEC’s complaint names multiple relief defendants in efforts to recover proceeds the defendants may have received from the fraudulent acts.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

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