- REUTERS/Jason Lee
Investors are clamoring for a piece of Uber, but one group is accused of capitalizing in the wrong way.
A hedge fund stands accused by the US Securities and Exchange Commission and the Department of Justice of selling investors fake pre-IPO shares of Uber, Airbnb, and Alibaba before blowing the money on an elaborate lifestyle, according to the complaint.
On May 31, the DOJ charged JSG Capital Investments’ CEO and founder, Jason Gill, who also goes by the name Jaswant Singh Gill, and his colleague Javier Carlos Rios with raising more than $9 million in investor funds and then diverting or stealing millions of it, according to the SEC, which assisted in the case.
That money went to fund an elaborate lifestyle, the complaint said, including trips to Vegas, visits to “gentlemen’s clubs,” and access to professional sporting events.
Along the way, the DOJ said, Gill and Rios did repay small amounts to earlier investors using new investor money as “interest payments” to not arouse suspicion, “in a manner that was consistent with a classic Ponzi scheme.”
There’s no evidence that the group ever bought any pre-IPO shares of any tech company, including Uber, according to the DOJ.
The ride-hailing company Uber is among the world’s most valuable private companies, but it is known to have tight controls over its shares, and it dislikes unauthorized shares being on the market. Other funds that have tried to create groups to buy as much as $10 million in preferred shares in Uber’s latest round have decided not to go down that path, citing a lack of investor interest, according to a Bloomberg report.