Two Indian-origin men charged with securities, wire fraud in US

New York: Two Indian-origin men have been charged by federal authorities in the US with securities and wire fraud for inflating the value of private funds they advised by hundreds of millions of dollars.

Anilesh Ahuja, 49, of New York, the founder, chief executive officer, and chief investment officer of a New York-based investment firm that managed hedge funds focused on structured credit products, was arrested on Wednesday, Audrey Strauss, the Attorney for the United States said.

In addition, Strauss announced the unsealing of charges against Ashish Dole, a former chief risk officer and trader at the firm, and Frank Dinucci, a former salesman at a broker-dealer.

Dole, 34 of White Plains had pleaded guilty last November to one count of conspiracy to commit securities fraud and wire fraud and one count of securities fraud. Dinucci has also pled guilty and is cooperating with the government.

Charges were also filed against Amin Majidi, a former partner and portfolio manager at the firm and Jeremy Shor, a former trader.

Ahuja, Majidi 52, and Shor, 46 are charged with participating in a scheme, from in or about 2014 through 2016, to commit securities fraud and wire fraud relating to the mismarking of certain securities held in hedge funds that the firm managed, thus fraudulently inflating the net asset value of those funds as reported to investors and potential investors.

At its peak, the mismarking across all funds managed by the firm exceeded USD 200 million.

The charges carry up to 25 years in prison and a maximum fine of USD 5 million.

“Investors rely on a hedge fund’s performance numbers when deciding whom to trust with their capital. To compete with other peer funds, Neil Ahuja, founder of an investment firm, allegedly manipulated the firm’s performance numbers, using fraudulently inflated values for the firm’s securities holdings and lying to investors about how the firm would mark its positions,” Strauss said.

She added that by allegedly cooking the books, Ahuja and his co-defendants made the fund appear more attractive to would-be investors and dissuaded current investors from withdrawing their investments.

In a separate action, the Securities and Exchange Commission filed civil charges against Ahuja, Majidi and Shor.

According to the allegations in the charging documents, from at about 2014 through 2016, Ahuja, Majidi, Shor and others, including Dole and Dinucci participated in a scheme to defraud the firm’s investors and potential investors by deceptively mismarking each month the value of certain securities held in various funds, fraudulently inflating the net asset value of those funds as reported to investors and potential investors. At times, the net asset value was overstated by more than USD 200 million across the funds managed by the firm.

The mismarking scheme evolved as a result of demands by Ahuja and Majidi that the firm maintain its track record of success and keep pace with the performance of peer funds, regardless of market conditions or the actual performance of the funds.