U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20590 / May 20, 2008
SEC v. Amit Mathur, et al. (United States District Court for the District of Massachusetts, C.A. No. 05-10729 (MLW), filed April 12, 2005)
United States v. Mathur (United States District Court for the District of Massachusetts (Worcester), Case No. 4:06-cr-40034FDS)
Former Massachusetts Investment Adviser Found Guilty of Fraud; Louisiana Partner Faces Criminal Charges
The Securities and Exchange Commission announced today that on May 16, 2008, in a case prosecuted by the United States Attorney for the District of Massachusetts, a federal jury convicted investment adviser Amit Mathur, age 37, of Shrewsbury, Massachusetts, of 20 counts of federal mail and wire fraud for defrauding his investment advisory clients. Also, on February 25, 2008, the United States Attorney for the District of Massachusetts filed a Criminal Information against Mathur's business partner, Rajeev Johar, of West Monroe, Louisiana, concerning the same fraud. The U.S. Attorney's case against Johar is pending. Mathur and Johar operated an advisory firm called Entrust Capital Management, Inc., located in Worcester, Massachusetts. Mathur, Johar, and Entrust were previously named as defendants in a Commission civil action filed in 2005.
Mathur was initially indicted on criminal charges on September 28, 2006. At Mathur's two-week long criminal trial in May 2008, evidence was presented that Mathur, beginning in 2001, raised several million dollars in investor funds and dissipated millions in investor funds through undisclosed trading losses, unauthorized use of investor funds, and use of client funds for Mathur's personal expenditures. According to evidence presented at the criminal trial, Mathur used investor funds to, among other things, buy a Porsche Cayenne, purchase Mercedes Benz luxury vehicles, and fund gambling trips to Las Vegas for Mathur and his friends.
Mathur is currently scheduled to be sentenced on September 5, 2008. The Criminal Information filed against Johar in February 2008 alleged that Johar misappropriated millions in investor funds and misrepresented the nature and performance of investments made on behalf of Entrust investors.
The Commission filed its action against Mathur and Entrust on April 12, 2005 and filed an Amended Complaint adding Johar as a defendant on September 14, 2005. The Commission's Amended Complaint alleged that, from 2000 through 2005, the defendants engaged in a scheme to defraud investors in a purported hedge fund run by Mathur and Johar at Entrust. The Amended Complaint alleged that approximately twenty clients invested over $16 million with Entrust. The Commission alleged that the defendants made material misrepresentations to investors about, among other things, their assets under management and returns that the fund generated. According to the Amended Complaint, the defendants dissipated most of the $16 million invested through undisclosed trading losses and misappropriation of investor funds for the defendants' personal use. The Commission's action against Mathur, Entrust, and relief defendant AMR Realty, LLC, is pending. A Final Judgment by consent was entered against Johar in the Commission action on June 4, 2007, which, among other things, ordered him to pay over $600,000 in disgorgement of ill-gotten gains, prejudgment interest, and penalties. In separate administrative proceedings, the Commission issued an Order by consent on June 26, 2007, barring Johar from association with any investment adviser.
For more information, see Litigation Release Nos. 19181 (April 13, 2005), 19195 (April 20, 2005), 19396 (September 27, 2005), and 20143 (June 5, 2007). See also Advisers Act Release No. 2611 (June 26, 2007).