SAN FRANCISCO (CN) – A Southern California man must pay $5.8 million to the U.S. Securities and Exchange Commission for his role in a $10 million Ponzi scheme that defrauded nearly 200 investors, a federal judge ruled Tuesday.
U.S. District Judge Jeffery White granted the SEC's motion for default judgment against Jaswant "Jason" Gill of San Diego, and his investment firms, JSG Capital Investments and three affiliated companies.
The SEC sued Gill and his business partner Javier Rios in May 2016, claiming the pair lied to investors about using money to buy pre-IPO shares in companies such as Airbnb and Uber.
Shortly after the SEC filed its lawsuit, White froze the assets and bank accounts of the men, their wives and companies to ensure they could not " dissipate, conceal, or transfer assets which could be subject to an order directing disgorgement or the payment of civil money penalties.”
In an 8-page ruling Tuesday, White issued default judgment in favor of the SEC after the defendants failed to appear in court or respond to the SEC's complaint. A day earlier, the judge granted Rios relief from judgment after Rios’ public defender filed a motion to stay the case until a separate criminal case is resolved.
Rios and Gill were both charged with wire fraud and conspiracy to commit wire fraud in May 2016 over their roles in the scam.
Rios, of the San Diego County city of Chula Vista, claims he has a strong defense against those criminal charges because Gill already pleaded guilty, and "is prepared to testify that Mr. Rios was purposely kept in the dark regarding Mr. Gill's scheme," according to Rios' motion for relief from judgment.
The SEC had claimed Gill and Rios spent less than 1 percent of investors' money on shares, kept $2.7 million for themselves, spent $500,000 on "excursions," and doled out $4.2 million in Ponzi payments.
They ran "a classic investment scam and Ponzi scheme" and falsely promised investors "access to alternative investment strategies that were previously only available to the 1-percenters," according to the SEC's May 2016 complaint.
In his 8-page ruling, White permanently barred Gill from issuing, purchasing or selling shares with investor money in the future.
White also ordered Gill's company, JSG Management Group LLC, to disgorge an additional $105,650 in ill-gotten gains.
In the separate criminal case, Gill filed an application to plead guilty to 13 counts of wire fraud and one count of conspiracy to commit wire fraud on Aug. 2. He faces a maximum of 20 years in prison and a $250,000 fine.
The SEC and Gill's criminal defense attorney, Darlene Comstedt, did not immediately return emails and phone calls seeking comment Tuesday afternoon.
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