Pre-IPO Stock Fraud – Boca Raton, Florida Penny Stock Fraud Litigation and Arbitration Attorney
Securities and Exchange Commission v. JSG Capital Investments, LLC, et al., Civil Action No. 3:16-cv-02814 (N.D. Ca.)
SEC Halts Ponzi Scheme Aimed At Middle Class
The Securities and Exchange Commission has charged two California men and their investment firm with operating a Ponzi scheme as they purported 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 alleges that instead of using the firm’s purported 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. They never actually invested in any pre-IPO shares, and have been using money from new investors to pay supposed returns to earlier investors. They have raised approximately $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 percent.
According to the SEC’s complaint filed in federal court in San Francisco, 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.
Investors can quickly and easily check the credentials of people selling investments and determine whether they are registered by using the SEC’s investor.gov website.
In a parallel action, the U.S. Attorney’s Office for the Northern District of California today announced criminal charges against Gill and Rios.
The SEC’s complaint charges Gill, Rios, JSG Capital Investments, LLC, JSG Capital LLC, JSG Capital, LLC and JSG Enterprises LLC with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and charges Gill and JSG Capital Investments, LLC with violations of Section 206(1) and (2) of the Investment Advisers Act of 1940. The complaint also names JSG Management Group, LLC as a relief defendant for the purpose of recovering ill-gotten gains from the scheme.
The SEC’s complaint seeks permanent injunctions plus disgorgement and monetary penalties from Gill, Rios, JSG Capital Investments and related entities. The SEC has obtained a court order to freeze the assets of Gill, Rios, and the JSG entities and preliminarily enjoin them from violating the antifraud provisions of the federal securities laws and raising money from investors.
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