U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21306 / November 19, 2009
Securities and Exchange Commission v. Mohit A. Khanna, MAK 1 Enterprises Group, LLC, et al., United States District Court for the Southern District of California, Case No. 09cv1784 BEN (POR) (filed Aug. 17, 2009).
SEC OBTAINS PERMANENT INJUNCTIONS IN A PHONY INVESTMENT POOL SCHEME; PROMOTER PERMANENTLY BARRED
The Securities and Exchange Commission ("Commission") announced that it obtained permanent injunctions against Mohit A. Khanna, age 32, and his former company, MAK 1 Enterprises Group LLC, both of San Diego, Calif., which operated a phony investment pool scheme. Mohit Khanna and MAK 1, through its Court-appointed receiver, agreed to the entry of the permanent injunctions, which were entered on October 6 and November 3, 2009, respectively. The injunctions permanently enjoin Mohit Khanna and MAK 1 from violating the antifraud and securities registration provisions of the federal securities laws.
The Commission's initial complaint, filed August 17, in federal court in San Diego, alleged that Mohit Khanna and MAK 1 claimed to pool investor funds to invest in foreign currency trading products and other guaranteed investments, which the complaint alleged were non-existent. The complaint alleged the defendants engaged in a variety of fraudulent conduct designed to solicit new investors and lull existing investors into believing their money was safe and secure, and that Mohit Khanna and MAK 1 misused investor funds to pay for several luxury cars and residential properties, including those owned by his wife, Sharanjit K. Khanna. The complaint charged Mohit Khanna and MAK 1 with violating the antifraud and securities registration provisions of the federal securities laws and named as a relief defendant another company Mohit Khanna controlled, First Opportunities Management Group, Inc. The Commission filed an amended complaint on September 18, which named Sharanjit Khanna as a defendant and charged her with violations of the antifraud provisions and securities registration provisions.
On August 26, the Court issued an order to show cause why Mohit Khanna should not be held in civil contempt for violating the Court's Temporary Restraining Order granted on August 18 based on evidence filed by the Commission and the receiver. The Court ordered Mohit Khanna to show cause why an order of civil contempt should not be issued and why he should not be sanctioned pending his compliance with the TRO. The Court held multiple hearings on the contempt application.
On September 3, the Court granted additional relief that the Commission sought, with the consent of Mohit Khanna, including orders freezing the assets of Mohit Khanna and MAK 1, appointing Charles LaBella of LaBella & McNamara, LLP, as permanent receiver over MAK 1, and requiring Mohit Khanna and MAK 1 to repatriate assets from abroad. On October 6, the Court entered an order, with the consent of Sharanjit Khanna, freezing her assets.
On October 27, the Commission instituted administrative proceedings against Mohit Khanna barring him from association with a broker or dealer based on the entry of the judgment of permanent injunction against him. Mohit Khanna consented to the entry of the order without admitting or denying the Commission's findings.
In addition to the relief already obtained, the Commission seeks a permanent injunction, disgorgement, and civil penalties against Sharanjit Khanna, and disgorgement and civil penalties against Mohit Khanna and MAK 1.
For further information, see Litigation Release No. 21181 (August 20, 2009).