US$130 million fraud committed by targeting Indian Americans, US SEC gets emergency relief to stop the fraud

The Securities and Exchange Commission on Monday announced that it has issued a temporary stop order to stop an ongoing fraud targeting the Indian American community. There has also been talk of confiscation of property and giving other emergency relief. Approximately US$130 million has been raised in this fraud since April 2021.

The three founders of Nanban Ventures LLC are Gopal Krishnan, Manivannan Shanmugam, and Sakthivel Palani Gounder, the SEC said in a press statement. All of them are collectively known as the Founders. Apart from this, three other entities which are controlled by these founders are allegedly involved in the fraud.

The SEC complaint, unsealed in the U.S. District Court for the Eastern District of Texas, alleges that the defendants raised more than US$89 million from more than 350 investors for investment in purported venture capital funds. This amount was managed by all the founders through Nanban Ventures LLC. They raised over US$39 million from 10 investors, which were then invested directly into three other entities controlled by the founders.

The complaint says the founders exaggerated the profitability of the investments and paid investors at least US$17.8 million in fake profits that were actually Ponzi payments. The SEC alleged that the defendants misrepresented Krishnan's expertise and success by using the 'GK Strategies' options trading methodology bearing his name.