Investment Adviser is Accused of “Ponzi-Like” Scam Involving 50 Investors

The US Securities and Exchange Commission has filed fraud charges against investment adviser Amrit J.S. Chahal, who founded Kane Capital Investment Group, LLC. Chahal is accused of using his company to solicit about $1.4M from about 50 people, some of them friends and family members. Now, the regulator wants a permanent injunction, penalties, and disgorgement.

According to the SEC’s securities fraud complaint, from at least 2/2015, the investment advisor targeted prospective investors by telling them he was a seasoned trader who could make clients “above-market returns” by employing a trading strategy whose risks were low. In truth, contends the Commission, Chahal had no previous substantive experience in the securities industry or in trading securities for others.

Investors gave Chahal their money with the understanding that he would use the funds to buy and sell futures, options, and commodities. He told them they would have to pay a $2.5% yearly fee and a performance-based fee that was 10% of an investor’s returns that went beyond a yearly 30% return rate. Chahal also falsely claimed that Kane Capital employed the most current software to help it garner the “highest possible profit” from every investment, with a focus on choosing investments that were high-yield and low-risk. In truth, said the Commission, the accused investment advisor “traded risky options and margins,” as well as sold and purchased commodities and futures.

While, at first, Chahal at first did place client monies into different investments, these sustained significant losses. However, rather than telling investors about the losses, he lied to them. Clients purportedly received false statements that inflated returns, causing some investors to give him more money to invest.

Chahal also used investor funds for his own purposes, including to pay for rent, dining out, an expensive car, and travel. He took some of their money to issue Ponzi-like payments to earlier investors. Chahal profited from clients’ returns.

The SEC is not the only regulator to go after Chahal. The Commodity Futures Trading Commission has filed its enforcement action against the investment advisor and his Kane Capital Investment Group. It described the latter as a commodity pool. The CFTC charges include commodity pool fraud, commodity futures fraud, and the illegal commingling of Chahal’s own funds with Kane Capital monies. Chahal faces additional charges of not registering as a Commodity Pool Operator with the CFTC.

The CFTC’s complaint accused the defendants of touting 28-34% in yearly averaged trading profits (occasionally, even more), even while knowing that the company was losing money and not making any. Meantime, clients were allegedly defrauded.

The CFTC wants total restitution for those that were harmed, as well as disgorgement of ill-gotten gains, trading and registration bans, and civil monetary penalties.

Chahal is also facing criminal charges. The United States Attorney’s Office for the Eastern District of Virginia has filed multiple criminal charges against him. Prosecutors contend that his Ponzi-like scam caused investors who were his clients to sustain losses.

Please contact our investment adviser fraud lawyers if you invested through Chahal and his Kane Capital Investment Group or through any other investment adviser that you feel may have acted in a manner that caused you to lose money.

The SEC Complaint Against Chahal (PDF)

CFTC Charges The Kane Capital Investment Group, LLC and Amrit Chahal of Virginia with Operating a Commodity Pool Ponzi Scheme, CFTC, April 13, 2018

Man Arrested For “Ponzi” Style Investment Fraud Scheme, Justice.gov, February 14, 2018

Investment Adviser is Accused of “Ponzi-Like” Scam Involving 50 Investors, Including Friends and Family

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