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Securities and Exchange Commission

Litigation Release No. 18526 / December 29, 2003

Securities and Exchange Commission v. Opulentica, LLC., Nasser Dawoud, Zarrar Sheikh, and Saimia Shahzadi, Relief Defendant, , 03 Civ. 10165 (S.D.N.Y.) (RJH)

The Securities and Exchange Commission today filed civil fraud charges against Opulentica, LLC of New York and its principals Zarrar Sheikh and Nasser A. Dawoud for the offer and sale of unregistered securities. The action alleges that, between March 2002 and the present, Opulentica, Sheikh, and Dawoud fraudulently raised over $500,000 by making material misrepresentations to actual and prospective investors concerning monthly and annual returns on investments, investment risks, and the existence of "insurance" to protect against investment losses.

Based on the SEC's application, which was filed simultaneously with the filing of the complaint, United States District Judge Richard J. Holwell of the Southern District of New York issued a temporary restraining order, freezing the assets of the defendants, directing the repatriation of investors funds wired to offshore accounts, prohibiting the destruction of documents, and granting expedited discovery. The Court scheduled a hearing for December 30, 2003, on the SEC's application for a preliminary injunction.

The SEC's complaint, filed in the United States District Court in Manhattan, names the following defendants and relief defendant:

Opulentica, a New York limited liability corporation that was formed on or about May 21, 2002, and whose purported office is located at 44 Wall Street, New York, New York. Opulentica has operated a website, through which it has offered, and continues to offer, to investors and potential investors a purported guaranteed return of 6% (which it claims would yield an annual return of 72%) on short-term investments.

Sheikh, age 33, is a registered agent of Opulentica and is identified as the contact person in Opulentica's advertisements in the "Weekly Pakistan News" and the "Pakistan Post" and as the media relations contact in other offering materials.

Dawoud, age 31, resides in Brooklyn, New York. In a bank account opening statement, Dawoud held himself out to be the president of Opulentica.

Relief Defendant, Saima Shahzadi, is Sheikh's wife and has received at least $56,200 in investor funds from Opulentica's bank accounts.

Further, the SEC's complaint alleges that:

  • As of December 9, 2003, the defendants raised approximately $538,000 from about twenty investors in Opulentica. The defendants solicited investors to open accounts with Opulentica for periods of 3, 6, 9, and 12 months. Opulentica promised investors returns of 6% monthly or, as described in the offering, 72% returns annually. Opulentica's website boasted that it offered investors "the maximum gain with the minimum of risk exposure" and "extensive insurance coverage" over all its accounts. In its offering materials, Opulentica listed fifteen individuals, including Sheikh, who it claimed constitute a "staff of dedicated, professional, and licensed financial analysts, [and] traders."
     
  • In truth, Opulentica was an ongoing fraud. Opulentica never produced profits of 6% per month. In fact, of the $538,000 raised, the defendants actually invested only $289,000 in reckless day trading through which the defendants lost over $117,000. Opulentica's trading accounts were not protected by insurance and investments in Opulentica were most definitely not "risk-free." The defendants failed to disclose that they had diverted $249,000 of investor funds for their personal use and that of Shahzadi. The defendants misrepresented the credentials of Opulentica's purported management.

The defendants are charged with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief granted by the court, the SEC is seeking a judgment of permanent injunction, disgorgement of ill-gotten gains, and monetary penalties.

The Commission acknowledges the assistance in this matter of the Office of the United States Attorney for the Southern District of New York and the U.S. Postal Inspection Service.

 

http://www.sec.gov/litigation/litreleases/lr18526.htm

Modified: 01/12/2004