The U.S. Securities and Exchange Commission (SEC) has recently charged two California men and their investment firm with operating a Ponzi scheme. They claimed to specialize in serving middle-class investors and securing exorbitant returns by investing in hot pre-IPO stocks. The agency also obtained a court-ordered asset freeze against them.
The SEC alleged that instead of using the firm’s reported proprietary trading models and investing in pre-IPO shares of well-known tech companies like Uber, Alibaba, and Airbnb as promised to investors, Jaswant “Jason” Gill and Javier Rios personally pocketed at least $2.8 million in investor funds, using some of that money to pay for excursions to high-end restaurants and luxury retail stores as well as jaunts to Las Vegas casinos, gentlemen’s clubs, and professional sporting events.
Gill and Rios never actually invested in any pre-IPO shares, and have been using money from new investors to pay supposed returns to earlier investors. They raised roughly $10 million through their firm, JSG Capital Investments, and related entities, by catering to average retail investors and promising them exclusive investment opportunities “previously only available to the one-percenters,” with guaranteed annual returns of up to 60%.
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According to the complaint, Gill in particular has brandished phony credentials, telling investors he founded his firm after serving as a managing director at Morgan Stanley. He also boasted partnerships with several Silicon Valley venture capital firms. Gill, Rios, and JSG Capital Investments are not registered with the SEC or any state regulator. Rios’s background is in food service.
Jina L. Choi, Director of the SEC’s San Francisco Regional Office, commented:
We allege that Gill and Rios enticed middle-class investors by promising access to highly coveted investment opportunities they claimed were typically reserved for the rich. Exclusivity, exorbitant returns, and exaggerated credentials are all classic hallmarks of a Ponzi scheme, and investors can protect themselves by heeding these red flags and checking whether the person pitching the investments is properly registered to sell them.
In a parallel action, the U.S. Attorney’s Office announced criminal charges against Gill and Rios.
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