Help from an Affinity Fraud Defense Lawyer
Affinity frauds continue to be in the crosshairs of the Enforcement Division of the U.S. Securities and Exchange Commission (SEC). This particularly pernicious fraud targets people of a particular ethnic, religious or racial community, where the fraudster pretends to be, or is a member of, the targeted community, and raises investment capital group based off the trust and credibility his status affords him.
Case in point: the SEC recently filed an enforcement lawsuit against Arsalan A. Rawjani and the business enterprise he operated, Trade with Ayasa, LLC, which operated through various corporate forms, for allegedly conducting an affinity fraud and Ponzi scheme centered in the North Texas Ismaili community, where Rawjani was an active member and community leader.
Filed in federal district court in Dallas, Texas, the lawsuit charges Rawjani, Trade with Ayasa, LLC (Texas), Trade with Ayasa, LLC (Wyoming), and Trade with Ayasa, LLC (Nevada) (collectively, the “Defendants”) with violating 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. The complaint further charges the Defendants with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933.
Moreover, the SEC alleges in its court action that Rawjani held himself out in his community as an expert in options trading. He offered, at first to friends and acquaintances and then more broadly within the religious community of Ismaili Muslims, principally in the Dallas-Fort Worth metropolitan area, securities in the form of written and oral investment contracts that promised a guaranteed monthly dividend (usually between three and five percent of principal) and guaranteed repayment of principal after an investment term (usually one year). In connection with his solicitation of capital from potential investors, one of the assurances he purportedly offered was that investors would be able to watch him conduct options trading each day on YouTube or Discord.
Rawjani has claimed to have raised approximately $18 million from investors, but he actually paid most “returns” by using new investor money and derived insignificant or no profits from his touted options-trading expertise, per the SEC. Additionally, per the SEC, Rawjani diverted millions of dollars of investors’ money to himself, his spouse, and others through undisclosed withdrawals, commissions, and loans, all of which contributed to the collapse of his Ponzi scheme and millions of dollars of investor losses, the SEC alleged. Even after he was unable to make dividend payments to earlier investors, Rawjani continued to solicit new investors using the same promises and guarantees of monthly payments and principal protection. Bank records indicate that Rawjani raised more than $2 million during the period he was unable to make promised payments to earlier investors. He stopped paying monthly dividends to investors and left investors with millions of dollars in losses the SEC has charged.
Finally, the SEC contended in its enforcement suit that Rawjani was a member of LLCs in at least three different states that were registered as “Trade with Ayasa, LLC,” and he also used and signed documents on behalf of “Trade with Ayasa, LLC” during periods of time when no such company was in existence in any state or when the corporate entity whose name Rawjani used had been dissolved by state corporation authorities.
The SEC seeks injunctive relief, disgorgement (return of ill-gotten gains derived from the alleged securities fraud), plus pre-judgment interest on a joint and several basis and civil penalties.
Contact Affinity Fraud Defense Lawyer David Chase
Nationally known and respected SEC fraud defense lawyer David Chase, of the Law Firm of David R. Chase, has successfully represented individuals in SEC investigations around the country for more than 25 years, having previously served as a Senior Counsel in the SEC’s Division of Enforcement in its Miami, Florida Office. If you are under SEC investigation, or just received a SEC Subpoena and require a seasoned securities attorney to guide you through the SEC investigation process and protect your legal rights, contact David at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. David represents clients in SEC investigations nationwide. Visit the Firm’s website to read about David’s SEC defense experience and the firm’s recent successful results for its clients at: www.securitiesfrauddefense.net.
