A fraud attempt that has raised over $130 million dollars since April 2021 has been frozen by the Securities and Exchange Commission. Gopala Krishnan, Manivannan Shanmugam, and Sakthivel Palani Gounder, the three founders of Nanban Ventures LLC, are all responsible for the scam. According to the SEC's complaint, the defendants solicited investments from more than 351 different individuals and entities for a total of over $89 million. The LLC served as a conduit for the collection of these funds, while ten investors contributed over $39 million directly to the other organizations.
The corporation paid out at least $17.8 million in Ponzi-like earnings to investors after exaggerating the returns on their investments. The complaint also alleges that Krishnan's "GK Strategies" options trading strategy overstated his level of experience. Nanban Ventures' private placement memoranda for its venture capital funds made similar claims, while Krishnan stated in a YouTube video that he had achieved returns of over 100 percent as fund manager. The company's claims that this investment technique will significantly beat the S&P 500 were clearly not realized.
Gurbir S. Grewal, Director of the SEC's Division of Enforcement, stated, "We allege that the defendants engaged in a large-scale affinity fraud that targeted hundreds of investors, largely from the Dallas-Fort Worth area Indian American Community." The defendants reportedly generated approximately $130 million from investors by making false promises of unreasonable returns and lying about the performance of their investing schemes. The lawsuit says that the defendants engaged in classic Ponzi scheme behavior by using investor funds to pay themselves millions of dollars while pretending to distribute profits to other investors. Investors should verify the credentials of purported experts and be wary of investments promising excessive profits.
It is the SEC's contention that Nanban Ventures and its principals breached their fiduciary duties by soliciting millions of dollars in investments from venture capital firms for companies in which they had a financial interest. From this, they took out a minimum of $6,000,000 for themselves.
According to SEC Fort Worth Regional Office Director Eric Werner, "the defendants used the 'Nanban' branding, a word that means 'friend,' to raise nearly $130 million from investors of mostly Indian descent." "However, the defendants have been the furthest thing from 'friends' to their investors, raising money and paying false returns on a foundation of lies."
