EDITOR’S NOTE: This is one to think about if you’re an “Achieve Community” fan who’s moved over to the “Rockfeller” Ponzi-board scam while asserting its professional-looking website puts you at ease — even though you don’t know who’s running the purported company and apparently have formed the irrational belief that engaging a “chat” attendant through the website somehow means you’ve conducted due diligence.
You’re about to read a tale about a man, his attractive websites and the artifices he allegedly employed to make sure he had a ready supply of cash at his disposal during his long con. The take home: Eye-pleasing websites and stories of fantastic success routinely are used to conduct and fuel securities fraud.
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UPDATED 6:51 P.M. ET U.S.A. Moazzam Ifzal Malik, also known as Mark Malik, has been indicted, arrested and jailed in New York “on $1 million bond over $1 million cash bail,” state Attorney General Eric T. Schneiderman announced yesterday.
Separately, the SEC announced civil charges against Malik, whom Schneiderman described as a Pakistani who’d defrauded investors in New York, Florida, Texas, Canada and Switzerland after setting up a constantly evolving flim-flam operation.
Malik, the SEC charged, solicited investors with promises of consistently high returns. In the end, though, investors were left holding the bag.
“By pretending to be a successful hedge fund manager, Malik conned investors into bankrolling his lavish lifestyle,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.
For a while, according to investigators, Malik was able to outsmart his investors, in part by creating “opportunity” after “opportunity” to keep the scam going. He even outsmarted financial journalists. But it eventually all came crashing down as redemptions stalled or disappeared and investors grew more skeptical.
The five-year wave of fraud ended yesterday, authorities said, alleging that Malik still was trying to pick pockets as recently as January of this year.
Precisely when Malik, 33, came to America and began his alleged long con is unclear. The SEC said he attended high school in Pakistan and later “became registered with FINRA as a stock broker trainee at a New York-based investment advisory firm from where he was terminated in November 2009.”
Since 2009, the attorney general said, Malik was associated with entities identified as Wall Street Creative Partners L.P., Seven Sages Capital, L.P., American Bridge Investments L.P., and, most recently, Wolf Hedge LLC.
His business? “Purported” hedge funds that “promised his victims a partnership interest,” Schneiderman said.
It’s pretty clear that both the attorney general and the SEC want to use the cases against Malik to create a teachable moment. Schneiderman pointedly published a link to one of Malik’s webpages. The SEC published links to two Malik sites. (See one. See two.)
It is from these attractive sites and corresponding links to social media such as Twitter that Malik created a myth around himself and engineered his alleged scheme to defraud.
The SEC’s complaint is a real keeper for persons able to experience a teachable moment. It relates a tale of the impossible fictions Malik used to fleece his marks. If more money were involved — indeed, as this point we’re talking “only” about an $840,774 swindle — Hollywood perhaps would come calling.
There are so many interesting allegations it’s hard to know where to begin. Let’s start with the allegation Malik used the web to deceive, something many scams (including the Ponzi-board program “Rockfeller” and “Achieve Community”) have in common.
“In addition to communicating with investors using his own name, Malik created a fictitious identity named ‘Amanda Ebert’ to communicate with several investors. Malik sent emails from Amanda Ebert to several investors, with each email including a photograph of Ms. Ebert,” the SEC charged.
“The emails identified Ms. Ebert as ‘Investor Relations, Wolf Hedge LLC’ and attached customer account statements, which contained inflated valuations,” the agency said. “However, there was never any such person named Amanda Ebert associated with [American Bridge Investment Group], Wolf Hedge, or Malik.”
Malik simply plucked a photo of a woman off the web and worked it into his scam, the SEC alleged.
And what of redemption delays? Although Malik was not running a Ponzi-board swindle, his purported hedge fund sure acted like one. The SEC identified one of his victims as “Investor A.” After this investor repeatedly asked Malik for a redemption, the delay in granting one initially was blamed on a busy travel and work schedule.
“Okay working literally 24.7 just came back from Vermont (client meetings),” Malik allegedly advised the investor in an email. “I will call you on Monday and solve the issue. I promise.”
That call allegedly never came. Another month passed. Here’s what happened next, according to the complaint (italics added):
“Investor A did not hear from Malik again until September 2013 when a purported Malik employee named ‘Courtney,’ another fictitious identity used by Malik, emailed the investor as follows: ‘Mr. Malik has been [sic] passed away with the heart attack after accident. We will dissolve the fund shortly.’”
How about name-dropping of the sort that regularly occurs among hucksters pushing HYIP “programs?”
Well, Malik allegedly did that, too — perhaps with particularly notable success. You see, the SEC alleged that Malik duped Bloomberg and BarclayHedge into giving him positive press, and then used the inaccurate coverage he created to dupe his marks.
“In 2012, Barclay Hedge awarded American Bridge Investments L.P. the ‘yearly performance award’ and ranked the fund as the year’s top performing equity long-short fund with over $100 million in assets,” Schneiderman’s office alleged.
In its complaint, the SEC alleged that American Bridge’s trading account “never held more than $90,177 in assets.”
It gets worse. During the same year American Bridge and its Seven Sages spinoff were winning awards as purported rising stars, “Seven Sages’ brokerage account held only $269.52,” the SEC said.
How did Malik pull it off? By creating false financials and presenting them to reporters, the SEC charged.
From the SEC complaint (italics added/light editing performed):
Malik submitted to BarclayHedge a purported financial statement and auditor’s report of Seven Sages, dated December 31, 2012, which listed Berkowitz & Associates, a purported accounting firm with an Iselin, New Jersey address. The report claimed that Berkowitz & Associates had audited the Seven Sages’ financial statement.
This information was false. There is no accounting firm named Berkowitz & Associates in Iselin, New Jersey, and no auditor ever served as ABIG’s or Seven Sages’ auditor.
In the purported financial statement sent to Barclay Hedge, as of December 31, 2012, Seven Sages reported funds under management of$100.26 million. In fact, at that time Seven Sages’ brokerage account held only $269.52.
Malik eventually used another trick from the scammer’s playbook: The SEC alleged he married his namedropping to a purported IPO. Among the names dropped in the never-to-materialize IPO were the New York Stock Exchange, KPMG, Credit Suisse, JP Morgan, Barclays, Guggenheim and Merrill Lynch.
What to do when skeptical investors start turning up the heat? Here, Malik again engaged in the sort of conduct seen in HYIP scheme after HYIP scheme on the Ponzi boards.
This, friends, is stuff made for Hollywood:
“[O]n February 22, 2014, after Investor C had repeatedly asked Malik to redeem his investment (and Malik refused), Malik sent the investor a threatening email,” the SEC alleged. “The email contained a video of a werewolf movie with Malik’s comment ‘that’s what I think I am.’ Malik sent this email as a threat, indicating that Malik was as dangerous and threatening as a werewolf, and the email was intended to deter Investor C from efforts to redeem or to contact the authorities.”
As is the case in many Ponzi-board scams, the threats allegedly didn’t end there.
“Malik sent Investor D, who had repeatedly requested a redemption (which Malik refused), irate and profane emails apparently because Malik believed that the investor had contacted the [SEC] staff,” the agency alleged.
As Malik allegedly dialed up his egregious conduct, he did something else commonly seen in the HYIP sphere: tried to rip off one or more of his victims for a second time.
After his menacing conduct to Investor C, the SEC said, “Malik solicited Investor C to invest an additional $100,000.”
This solicitation came in January 2015, about 11 months after Malik threatened Investor C with the werewolf imagery, according to the complaint.
Along the way, the SEC charged, Malik sent emails that repeatedly used exclamation marks.
It’s something that happens every hour in HYIP Ponzi Land.
This, the SEC said, was one of the Malik emails: “Increase everyone! We are going to go in the biggest trade with full hedge and stop loss. You may redeem next month if you wish. INCREASE!!!”
A false screen shot that showed a a fund value of $56 million was part of the scam, the SEC alleged.
So was the use of “uncompensated individuals to conduct marketing and perform other work for him,” the SEC said.
And when things started caving in, Malik “sent emails to investors accusing them of trying to ruin him by communicating with the Commission staff, while simultaneously soliciting them to invest additional funds.”
At one point, though, he finally remained silent, according to the complaint.
“Malik asserted his Fifth Amendment privilege against self-incrimination in response to the Commission’s staffs subpoenas compelling him to testify and produce documents,” the SEC said.
Read the SEC’s statement and access the complaint.
