SEC puts off case against Indians nationals

Proceedings in Profits Paradise case have been delayed by six months

The US Securities and Exchange Commission (SEC) has postponed the proceedings against two Indian individuals found to be involved in a fraudulent scheme involving fake, abnormal returns and bogus identities.

The duo are believed to be in India, but the US securities markets regulator has not yet served them the order instituting proceedings (OIP). OIPs are documents required to be served on parties involved before continuing proceedings against them.

The SEC has pushed the case by about six months, according to documents it uploads on its website. "To allow time for service of the OIP and Respondents' Answers…the hearing will be postponed… and a pre-hearing conference will be held by telephone on June 26, 2015, at 10:30 am EDT, if the proceeding has not been resolved by then. The Division of Enforcement will provide a status report on its efforts to serve Respondents on January 23, 2015, and every sixty days thereafter," said the order.

CATCHING UP IS HARD TO DO

• US’s SEC passes order against Profits Paradise
• Two Indians found to be behind scheme
• Scheme was illegal, promised abnormal returns
• Order instituting proceedings not yet served, says SEC
• Puts off case which was to be heard on December 15
• Gives time till June to complete proceedings

Pankaj Srivastava and Nataraj Kavuri were said to have offered guaranteed high daily profits of 1.5-two per cent every day. They attracted investors through social media to their investment management company, Profits Paradise. Facebook, YouTube, and Twitter were all used to bring investors into the fold, according to the SEC. The returns were to be generated supposedly through investments 'on foreign exchanges as well as in stocks and commodities'.

A statement issued following the investigation detailed charges including use of fictitious names to carry out fraud.

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

Emails sent to the SEC and the Securities and Exchange Board of India (Sebi) did not elicit a reply.

After receiving a request from the SEC, Sebi had conducted searches in Lucknow-based software company Sysfo Solutions, which is linked to Profits Paradise. It had found that there were about 800 e-mails addressed to Pankaj Srivastava. It had also found that Nathan Jones's real name was Nataraj Kavuri. It passed on all the information to SEC, which passed an initial order in November.

The duo were techies from Mumbai and Hyderabad, respectively. The site had begun to attract as many as 4,000 visitors a day before it was eventually shut down.

"Postings on Profit Paradise's Facebook page promised investors they could 'Enjoy Hassle Free Income' and advertised a '5% Referral Commission.' The scheme also utilised a Profits Paradise Twitter account to steer potential investors to the Profits Paradise website, and Srivastava and Kavuri created a Google Plus page to promote the investment opportunity," said an SEC statement.

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