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Indians charged for running fraudulent investment scheme

New York: Two Indians have been charged by US authorities for running an alleged high-yield investment scheme through which they sought to exploit investors by pervasive social media pitches on Facebook, YouTube and Twitter.

The Securities and Exchange Commission's (SEC) Enforcement Division alleges that Pankaj Srivastava and Nataraj Kavuri offered "guaranteed" daily profits as they anonymously solicited investments for their investment management company called Profits Paradise.

They invited investors to deposit funds that supposedly would be pooled with money from other investors and traded on
foreign exchanges as well as in stocks and commodities. They created a website and related social media sites to describe the profits as "huge", "lucrative", and "handsome", and they characterised the risk as "minimal."

SEC alleges that the guaranteed returns were false and that the investments being offered bore the hallmark of a fraudulent high-yield investment programme. Srivastava and Kavuri attempted to conceal their identities by supplying a fictitious name and contact information when registering their company's website address. They also communicated under the fake names of "Paul Allen" and "Nathan Jones."

After the SEC began its investigation into the investment offering, the company website was discontinued. "Srivastava and Kavuri used excessive secrecy in their effort to swindle investors through social media outreach and a website that attracted as many as 4,000 visitors per day," said Stephen Cohen, Associate Director of the SEC's Division of Enforcement.

"Our investigation stopped the constant solicitations once the website disappeared, and successfully tracked down the identities of the perpetrators behind those fraudulent solicitations." According to the SEC's order instituting administrative proceedings, Srivastava and Kavuri used the Profits Paradise website and YouTube videos to detail three investment plans.

Postings on the company's Facebook page promised investors they could "Enjoy Hassle Free Income" and advertised
a "5 per cent Referral Commission." The scheme also utilised a Twitter account to steer potential investors to the company website, and Srivastava and Kavuri created a Google Plus page to promote the investment. The SEC's Enforcement Division alleges that the duo violated the provisions of the federal Securities Act and will litigate the matter before an administrative law judge.

"We urge investors to exercise extreme caution if they are approached to invest in a website promising incredible returns with minimal or no risk. So-called high-yield investment programs are often frauds," said Lori J Schock, Director of the SEC's Office of Investor Education and Advocacy.

The SEC appreciated the assistance of the Securities and Exchange Board of India in investigating the matter.

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