Sunil Sharma, a former stockbroker who hasn’t been part of the securities industry for over 10 years, has pleaded guilty to fraud charges. The 68-year-old is facing 20 years behind bars for starting what prosecutors claim was a $6 million Ponzi scam that ran from 2008 to 2014.
He allegedly raised $8.36 million from over 30 investors, paying old investors with new investors’ money. According to officials, Sharma misappropriated some $2.5 million of investor funds for his own spending, including a cruise trip, leases for expensive cars, and a down payment on a house.
Investors received statements showing gains even as Sharma continued to lose their funds. He falsely claimed that investors were putting their money in safe investments when really the day trading strategy he employed was high risk.
Sharma was formerly affiliated with Raymond James (RJF), Merrill Lynch (MER), and A.G. Edwards. He let go of his license following the 9/11 terror attacks after his clients suffered huge losses. According to lawyers, he became an insurance salesman. He started teaching seminars about different kinds of annuities and insurance that his clients could buy.
Following his participation in an options trading workshop in 2007, Sharma started promoting his day trading strategy using options. He established Gold Coast Holding, LLC to trade the options. At first, he started making profits of over 10%. Prosecutors say that Sharma thought he could generate a better return on his insurance clients’ money if he day traded their funds and kept the difference.
He lied to customers, falsely stating that Gold Coast was a very safe way to make retirement money every month. He claimed that the funds would be part of a diversified portfolio, pooled with the funds of others, used to purchase bonds from emerging markets broad, and overseen by Goldman Sachs (GS). Investors were guaranteed a 6-7% rate of return for up to three years. It was suggested that they liquidate their retirement accounts and annuities.
Sharma reportedly planned to buy the bonds from Brazil, Indian, China, and Russia with some of the investor money and would day trade the rest. He never bought any bonds. Instead, Gold Coast and another company that he later set up day traded options via TDAmeritrade’s (AMTD) “thinkorswim” trading platform.
Right before the investment scam failed, Sharma ceased to trade in option spreads and started buying straight “put” and “call” options. Sharma hoped that this new strategy would let him get back his investment losses. Instead, he ran out of funds earlier this year.
Investors have sustained huge losses because of Sharma’s Ponzi scam.
Ponzi Scam
Recovering funds lost in a Ponzi scam can be challenging, which is why you should speak with an experienced broker fraud law firm to explore your legal options. In certain instances, third parties, such as banks, clearing firms, and broker-dealers, can be held liable for the Ponzi scammer’s actions for their inadvertent participation, failure to properly supervise the fraudster, or another part they might have played in allowing the scheme.
The best way to maximize your chances of recovering your losses in any fraud case is to work with a Ponzi fraud lawyer.
Day Trading Broker Steals More Than $6 Million from Investors in Long-Running Ponzi Scheme, FBI, June 2, 2015