Former Merrill Lynch and Raymond James stock broker, Sunil Sharma, plead guilty to wire fraud charges in Federal court last week. According to the U.S. Attorney Office (“USAO”), Mr. Sharma admitted that he stole $6 million from investors by misrepresenting that he was making conservative investments when he actually was pursuing a risky day trading strategy. Apparently, Mr. Sharma was not a successful day trader and eventually his so called conservative investment venture turned into a massive Ponzi scheme.
A “Ponzi scheme,” is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash.
After Mr. Sharma left the securities industry, he became an insurance broker, selling insurance and annuities. According to the USAO, Mr. Sharma’s scheme began with his insurance clients who were not making much money with their investments. Mr. Sharma believed if he could promise them 5%-6% returns, he could profit by day trading with the funds. The USAO stated that Mr. Sharma knew his clients would not engage in this risky investment strategy and so he lied. Mr. Sharma told his clients that Gold Coast Holding was a very safe way to increase their retirement income because their money was invested with many other investors, used to buy bonds, and managed by Goldman Sachs. Mr. Sharma guaranteed investors a 5%-6% rate of return to get them to invest with him.
The USAO claimed that Mr. Sharma lost over $3 million in the first two years of day trading. Mr. Sharma allegedly covered up the large losses by telling his investors that their investments were on track and by sending his clients false monthly or quarterly documents stating that their investments were producing the promised returns.
Mr. Sharma also admitted to diverting approximately $2.5 million of investors’ funds for his own personal benefit, including a down payment on a house, a cruise, and leasing expensive cars.
The former Merrill Lynch and Raymond James broker, Sunil Sharma, faces 20 years in prison on charges between 2008 and 2014. In addition, Mr. Sharma faces possible fines and restitution.
Attorney Pearce began his career at the SEC as an enforcement attorney more than 40 years ago. His SEC defense law practice clients have included public companies and their officers and directors, broker-dealers, investment advisors, and individuals being investigated in connection with their personal securities transactions. He has broad, extensive experience in matters arising from alleged 10b-5 fraud violations including, “insider trading,” Section 16(b) “short swing profit,” and Section 14 “proxy rule” violations as well as Section 9 “market manipulation” cases.
Have you have been contacted by the SEC or believe that you may be subject of an investigation? If so, call Mr. Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce defends various entities and individuals who may be the subject of an SEC investigation or enforcement action regarding their alleged involvement in securities laws violations.
Have you suffered investment losses at Merrill Lynch or Raymond James? Are you a victim of a Ponzi scheme? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.