NEW YORK: An Indian-origin investment advisor has been sentenced to 18 months in jail for perpetrating a USD 9 million investment fraud scheme involving Facebook stock.
Gignesh Movalia, 40, of Florida was also ordered by Chief US District Judge Steven Merryday to pay USD 5.39 million in restitution and to three years of supervised release following his prison sentence.
Movalia had pleaded guilty in August to one count of investment advisor fraud. In connection with his guilty plea, Movalia admitted that he founded OM Global Investment Fund in 2009 and subsequently used the fund to defraud investors.
In 2011 and 2012, Movalia raised more than USD 9 million from 130 investors by falsely claiming to have access to pre-initial public offering shares of Facebook. Instead of using this money to buy Facebook shares as promised, Movalia invested the money in other securities and concealed that fact from investors.
By September 2013 when it went into receivership, the OM Global Fund lost approximately USD 9 million, with USD 6 million of those losses as a result of the fraud scheme.