Indian-American CEO Sentenced to Prison for Fraud

indica News Bureau-


Indian origin CEO was convicted of participating in a scheme to mismark securities and thereby mislead investors as to the true value and has been sentenced to 50 months in prison.

Audrey Strauss, the Attorney for the United States, at Southern District of New York, announced, Anilesh Ahuja, also known as Neil, the founder, chief executive officer, and chief investment officer of Premium Point Investments L.P. (“PPI”), was engaged in a securities mismarking scheme from 2014 to 2016.

The jury, after 6 weeks of trial, convicted Ahuja on securities fraud-related offenses relating to their participation in a scheme to inflate the net asset value (NAV) reported to investors for hedge funds managed by PPI by more than $100 million.

According to the Indictment, the evidence presented at trial, and court filings, in or about 2008, Ahuja co-founded PPI, where he was the chief executive officer and chief investment officer. PPI managed hedge funds focused primarily on structured credit products, including residential mortgage-backed securities (RMBS).

PPI’s flagship mortgage credit fund (the “Hedge Fund”) was launched in or about October 2009. A segregated Employee Retirement Income Security Act (ERISA) fund held the same positions as the Mortgage Credit Fund.

In 2013, PPI launched a new fund (the “New Issue Fund”) that purchased and securitized pools of mortgages that were not issued or guaranteed by a government agency. At various relevant times between 2008 and 2016, PPI managed billions in assets.

Strauss said, “Ahuja conspired with others in his company and corrupt brokers to fraudulently inflate the value of the assets under their management, which in turn allowed them to charge higher fees and avoid redemptions by investors who otherwise would have pulled their money from Premium Point. The substantial prison term imposed on Ahuja appropriately holds him accountable for his criminal acts.”

From at least in or about 2014 through at least in or about 2016, Ahuja participated in a scheme to defraud PPI’s investors and potential investors in the Hedge Fund, ERISA Fund, and the New Issue Fund by deceptively mismarking each month the value of certain securities held in these funds, and thus fraudulently inflating the NAV of those funds as reported to investors and potential investors.

PPI fraudulently obtained inflated quotes, including from corrupt brokers, and manipulated its valuation process to inflate the purported value of securities held by the funds. The effect of the mismarking scheme was to materially overstate the reported NAV– at times by more than $100 million across the funds managed by PPI. This benefited PPI in at least two ways. First, PPI was able to charge its investors higher management and performance fees. Second, PPI was able to forestall redemptions by investors who would have requested a return of their funds had they known PPI’s true performance and operating health.

The mismarking scheme evolved as a result of demands by AHUJA that PPI maintains its track record of success and keeps pace with the performance of peer funds, regardless of market conditions or the actual performance of the funds. To achieve the goal of posting competitive returns, AHUJA, along with another partner, set an inflated “target” return for the Hedge Fund, ERISA Fund, and New Issue Fund at the end of each month, which was at times based in part on the performance of peer funds. The traders at PPI were then tasked with “reverse engineering” marks to meet the “targets.”