An Indian man has been convicted in the US for his role in a fraudulent scheme to pay kickbacks to an undercover agent posing as a corrupt hedge fund manager in order to obtain financing for small, publicly traded companies.
Sandip Shah, 41, a California-based business consultant, was convicted following a five-day jury trial on nine counts of wire fraud.
Shah was indicted in May 2014 and is scheduled to be sentenced in August this year.
- Two Indian-origin brothers indicted for money laundering by US court
- Pennsylvania mayor convicted of selling office
- PNB fraud case: 9 firms tied to Nirav Modi did no business, shut in two years
- Indian-American doctor charged with health care fraud
- Indian-American CEO convicted for paying kickbacks
- Two Indians charged with wire fraud in US; may face 20 years in prison
Shah was involved in a scheme to pay secret kickbacks to a purported investment fund representative who had agreed to use the fund’s money to buy stock in three companies that had hired Shah to help them raise capital.
The kickbacks were concealed through the use of sham consulting agreements and other fraudulent documents.
Shah and the company executives were unaware that the purported investment fund representative was actually an undercover agent with the FBI.
The conviction followed a year-long investigation focusing on preventing fraud in the micro-cap stock markets.
Micro-cap companies are small publicly traded companies whose stock often trades at pennies a share.
Fraud in the micro-cap markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse.
This is, in part, because accurate information about micro-cap stocks may be difficult for the average investor to find, since many micro-cap companies do not file financial reports with the Securities Exchange Commission.
The Securities and Exchange Commission, which conducted a parallel civil investigation alongside the FBI operation, cooperated with criminal authorities in bringing charges against Shah and 20 other defendants who participated in the kickback scheme.