The head of a Florida-based investment firm has pleaded guilty of defrauding investors of more than $18 million by claiming he had access to shares of top tech companies pre-IPO. According to reports, Fred Elm, the founder of Fort Lauderdale-based Elm Tree investments has admitted to swindling funds of investors and pleaded guilty to conspiracy and securities fraud charges in Manhattan federal court on May 15. Elm had reportedly claimed to his investors that he had access to shares of companies like Twitter and Uber, even before their stock exchange debut, and reportedly used the money for buying expensive cars, jewelry, etc.
As per reports, 51-year-old Elm will be sentenced on August 7, and prosecutors have agreed to seek a maximum prison term of over 17 years and a fine of nearly $4,00,000, which is approximately Rs 3 crore. Elm was caught in Canada and was extradited to the United States in January this year. Another Elm Tree executive Ahmad Naqvi, who used to lure investors by claiming they had access to pre-IPO shares of tech companies, was also arrested in Canada and extradited to the US in November. He is facing a prison term of up to 5 years, the sentence of which will be announced on June 29.
As per reports, both Elm and Naqvi used the money collected from over 50 investors to buy personal luxury items like houses, expensive cars, jewelry, etc. Elm reportedly bought a $1.4 million house and $3,00,000 worth of luxury cars, including a Bentley and Maserati. Elm and Naqvi also invested around $7 million, according to media reports. However, the investments were not made in tech companies as claimed by the duo. In 2014, Elm's company recorded a loss of $4 million and never made a profit in its history, media reports stated.