The Indian regulator played key role in uncovering the identity of two Indian men who floated the scheme
The recent crackdown by the Securities and Exchange Commission (SEC) of the US on a dubious money collection scheme by two India-based operators wouldn’t have been possible without a helping hand from its Indian counterpart.
According to sources, the Securities and Exchange Board of India (Sebi) was instrumental in uncovering the identity of the two individuals charged by the SEC last week, for allegedly exploiting investors by offering a high-yielding investment scheme called Profits Paradise.
They were two Indian software engineers who'd concealed their identities under foreign names to a quick buck, a source said. The matter for investigation and assistance was sent to Sebi last year, following which the Indian regulator’s investigation department conducted searches in Lucknow. The software for the online investment scheme, being marketed on social networking websites such as Facebook, Twitter and YouTube, was being provided by a Lucknow-based software company called Sysfo Solutions.
Sebi helps US SEC
- Conducts searches in Lucknow-based software company Syfso solutions
- Finds more than 800 e-mails addressed to Pankaj Srivastava, behind Profits Paradise
- Finds the marketing man Nathan Jones's real name is Nataraj Kavuri
- Passes mail trail and other information to SEC in December a year ago
- SEC passes order against the two Indians and the website, Profits Paradise, on November 14
“Sebi visited Syfso and its manager, Tanuj Anand, for obtaining the records concerning Profits Paradise, so that SEC could identify who was conducting the scheme and trace investor payment,” said a source.
While examining the documents, Sebi uncovered the identity of Pankaj Srivastava, a software engineer in Mumbai, aparently operating under the alias of Paul Allen. It told the US regulator he was the man behind the scheme.
“While examining the server, we realised that Anand had sent a total of over 800 e-mails to Pankaj Srivastava in connection with the dubious scheme,” said a source. Sebi's investigation department also unearthed that the scheme was being marketed internationally by a Nathan Jones, apparently a British national. Later, the SEC found the scheme was being marketed by Nataraj Kavuri from Hyderabad, under the allias of Nathan Jones. Sebi forwarded its findings to the SEC last December.
On November 14, the SEC passed an order against the scheme and two individuals, Pankaj Srivastava and Nataraj Kavuri.
“Together, they offered high-yield securities online through their website www.profitsparadise.com to cheat US-based investors,” said the SEC order. It said investors were invited to deposit funds that would supposedly be pooled with other investors’ funds to make ‘huge profits’ in foreign exchange, stocks and commodity trades.
It says the offering in the scheme was structured in a way that, under certain conditions, investors could never recover their principal investments.
"While examining the server we realised that Anand had sent a total of over 800 e-mails to Pankaj Srivastava in connection with the dubious scheme," said a source.
The market watchdog's investigation department while questioning Anand also unearthed that the scheme was being marketed internationally by a United Kingdom civilian Nathan Jones.
Later US SEC found out that the scheme was being marketed by Nataraj Kavuri from Hyderabad under the allias of Nathan Jones.
Sebi forwarded its findings to US SEC in December last.
In its order, SEC also said that the investment offered by Srivastava and Kavuri on their website was never legitimate and a classic example of a high-yield investment programme. "The investment returns promised by Profits Paradise were extraordinary - 180 per cent, 210 per cent or 240 per cent in 120 business days," it added.
Extent of damage and fund raising has not been ascertained yet; however the Commission has ordered Srivastava and Kavuri to file an answer to the allegations within 20 days.
