America
Indian descent investment adviser admits to $9M Facebook stock fraud
New York, Aug. Aug 14
An investment adviser of
Indian descent has admitted to a $9million-fraud involving Facebook
stock Thursday, the Federal Bureau of Investigation announced.
Gignesh
Movalia, the founder of OM Global Investment Fund, pleaded guilty in
Tampa before Federal Magistrate Judge Anthony E. Porcelli to one count
of investment advisor fraud. He is to be sentenced later.
Federal
Prosecutor A. Lee Bentley III said Movalia solicited investments in his
fund claiming that he could get shares of Facebook before its initial
public offering. He raised more than $15 million, of which $9 million
was buying Facebook shares. However, Bentley said in a statement,
Movalia used the $9 million for other investments and hid this from the
investors.
Ultimately, OM Global Investment Fund lost $9 million and went broke, Bentley said.
Last
year in June in a separate civil suit filed by the Securities and
Exchanges Commission, Federal Judge Jose E. Martinez in Miami ordered
Movalia and OM Investment fund to pay up $1.729 million in illegal
profits and fined him $300,000.
In additon to the Facebook stocks
fraud, the SEC had also accused him of making improper loans to third
parties and creating an institution with a name similar to OM Investment
Funds to evade monitoring by a Florida state court and using it to
solicit funds.