U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25774 / July 12, 2023
Securities and Exchange Commission v. Nayeem Choudhury and Dream Venture Capital Group, LLC, No. 1:23-cv-00573 (M.D.N.C. filed July 12, 2023)
SEC Seeks to Halt North Carolina-Based Ponzi Scheme
On July 12, 2023, the Securities and Exchange Commission filed an emergency action to halt an alleged multimillion-dollar Ponzi scheme run by Durham, North Carolina resident Nayeem Choudhury and his hedge fund, Dream Venture Capital Group LLC.
According to the SEC’s Complaint, filed in the United States District Court for the Middle District of North Carolina, Choudhury raised at least $9.3 million from investors by promising a risk-free investment in his hedge fund and falsely touting its superlative performance. In reality, the complaint states, Choudhury’s track record consisted almost uniformly of monthly six- and seven-figure trading losses, and Dream Venture lost over $4.8 million in options trading between August 2022 and June 2023. The complaint also states that Choudhury misused investor funds by using new-investor money to repay existing investors and by paying personal expenses out of fund assets, including the purchase of a luxury automobile in May 2023 for $85,000. Since July 2022, the SEC claims, Choudhury and Dream Venture have only repaid investors approximately $3.5 million.
The Complaint charges Choudhury and Dream Venture with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Section 5 of the Securities Act. Additionally, the Complaint charges Choudhury with violating Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder. The SEC seeks an asset freeze, a temporary restraining order, preliminary and permanent injunctions, a conduct-based injunction, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.
The SEC’s ongoing investigation is being conducted by Josh Hess, Tiffany Kunkle, and Robert Nesbitt, and supervised by Matthew McNamara and Justin Jeffries. The SEC’s litigation will be led by Edward Sullivan.