USC Professor Accused of $88 Million Scam
LOS ANGELES (CN) - A USC economics professor defrauded a Saudi Arabian student of $88 million through an investment scam, an assignee of the student claims in court.
Greenfield LLC, as assignee of all of student Jarallah al-Jarallah's claims, sued Egyptian national Dr. Ayman Kandeel in Superior Court, alleging fraud, conversion, securities fraud, negligent misrepresentation and other counts.
According to Greenfield, Kandeel reeled in al-Jarallah after the student came from Saudi Arabia to study economics at the university. The pair developed a "mentor-mentee relationship of trust that flourished not only as a result of Dr. Kandeel's expertise in finance, but also from their shared background in the Middle East," according to the complaint.
"Dr. Kandeel explained to Jarallah that in addition to being a USC economics professor, he also owns a private equity fund that caters to wealthy investors," the 23-page complaint states. "Exploiting their relationship of trust, Dr. Kandeel, along with his associate Drew, convinced the young Jarallah to invest $88 million of his father's money into Dr. Kandeel's fund."
Greenfield claims that Kandeel promised the student a 20 percent rate of return on his investment, told him that 80 percent of the investments would be fixed income-assets in America, and that a team of professional money managers would handle and manage the money.
"The entire investment, however, was a classic scam. Jarallah was shown impressive looking business plans and a prospectus, from time to time was given financial statements for the investment, and was provided opportunities to invest in what appeared to be very lucrative investments.
"Dr. Kandeel, along with his accomplice [defendant Kirkwood James] strung Jarallah and his father along for several years with assurances that nothing was wrong and the investments were doing just fine," the complaint states.
Greenfield claims that Kandeel and Drew tried to persuade al-Jarallah to invest $25 million more.
"The reality, however, is that the companies in which the fund invested are fake, and the money is gone," the lawsuit states.
In January 2013, when al-Jarallah asked to see financial statements, Kandeel admitted that he had no assets, according to the complaint.
Named as defendants are Kandeel, Drew, and the companies formed to "facilitate the fraud," PI Capital, Pacific International Holding Group, Pacific International Properties, PI Capital/Borak GP, PI Capital Distressed Real Estate Fund, PI Capital GP, PI Capital Fund, PI Capital Holdings, PI Capital Index Fund, PI Capital Investments, PI Capital Management, Middle Eastern Telecommunications, and Molecular, Endoscopic and Translational Imaging.
Greenfield seeks compensatory damages of $88 million plus interest, punitive damages and costs.
It is represented by Christopher Lilly with TroyGould.