Sunil Sharma, Ponzi Scheme, California 2023

California Day Trader Pleads Guilty to $6 Million Ponzi Scheme

San Diego, California - Sunil Sharma, a day trading broker from Carlsbad, pleaded guilty in federal court today to running a long-running Ponzi scheme, stealing more than $6 million from local investors.

According to his plea agreement, Sharma covered up the massive losses by continuing to falsely tell investors that their investments were doing well. He would send his investors monthly or quarterly statements that falsely reflected that their investments were generating the promised returns.

Sharma admitted that even while reassuring investors, he diverted approximately $2.5 million in investor funds for his own personal use, including: (1) approximately $700,000 towards the down payment of a $2 million home off Artesian Road in San Diego; (2) approximately $12,000 for a cruise in the Mediterranean; and (3) for leasing a Mercedes SL and a BMW.

As revealed in court documents, Sharma was a Series 7 licensed broker, who had worked for Merrill Lynch, AG Edwards, and as an independent broker for Raymond James. In 2000, Sharma moved to San Diego where he continued to practice as an independent broker. Due to the market crash that followed September 11, 2001, Sharma and his clients lost a substantial amount of money. As a result, Sharma voluntarily gave up his license to act as a securities broker.

After relinquishing his broker’s license, Sharma began to work in the insurance industry. In 2002, Sharma sold insurance from his business in Rancho Bernardo. He also began teaching seminars highlighting various types of insurance and annuities which could be purchased by his clients.

In 2007, Sharma attended an “Investools” workshop that convinced him that he could make money trading stock options in a conservative manner. After attending the workshop, he set up Gold Coast Holding, LLC (“Gold Coast”) as a vehicle to trade options. Sharma initially funded Gold Coast with approximately $50,000 of his own money that he had made selling insurance.

Due to the fact that his insurance clients were making very little money on their personal investments due to low interest rates, Sharma believed that they could make a better return (somewhere in the “neighborhood” of 5%-6%) if he could “day trade” their money and “pocket the difference.” Recognizing that his insurance customers would not have given him money for this venture, he lied to them and falsely stated that Gold Coast was an extremely safe way to earn a monthly retirement income because their money was to be: (1) part of a diversified portfolio; (2) pooled with many other investors; (3) used to buy bonds from emerging markets in Brazil, Russia, India, and China (“BRIC”); and (4) managed by Goldman Sachs.

Sharma guaranteed investors a rate of return (typically between 6%-7%) for two to three years and urged his clients to liquidate their retirement accounts and annuities based upon the safety of his investment scheme. Although Sharma initially planned on buying BRIC bonds with half the investor funds and day trading with the other half, he never in fact purchased BRIC or any other type of bonds. Instead, Gold Coast Holding (and later a second company he established, Safe Harbor Tax Lien Acquisitions) day traded options using TDAmeritrade’s “thinkorswim” trading platform.

Between January 2008 and November 2014, Sharma raised $8.36 million from 32 different clients using these two companies. In order to attract new investors, Sharma paid $2.12 million in “returns” to old clients from funds generally derived from the contribution of later investors.

For the crime of running a Ponzi scheme, Sharma will face sentencing in federal court. He has been charged with one count of wire fraud and faces up to 20 years in prison and a fine of up to $250,000. The case was investigated by the FBI and the U.S. Securities and Exchange Commission.

Sunil Sharma, a day trading broker from Carlsbad, California, is a Series 7 licensed broker who operated a Ponzi scheme, stealing over $6 million from local investors. He pleaded guilty to one count of wire fraud and faces up to 20 years in prison and a fine of up to $250,000.

Defendant: Sunil Sharma

Criminal Charges: Wire Fraud

City and State: San Diego, California

Exact Date: N/A (plea agreement)

Sentence or Outcome: awaiting sentencing

Dollar Amounts:

• $6 million stolen from investors
• $2.5 million diverted for personal use
• $700,000 for down payment on home
• $12,000 for Mediterranean cruise
• $50,000 initial funding for Gold Coast Holding
• $8.36 million raised from 32 clients
• $2.12 million paid to old clients

Source: https://www.justice.gov/usao-sdca/pr/day-trading-broker-steals-more-6-million-investors-long-running-ponzi-scheme