They promised shares in SpaceX – and wasted millions at clubs

The U.S. Securities and Exchange Commission has filed charges against fund managers who defrauded investors of millions of dollars. The managers promised access to exclusive shares in SpaceX and OpenAI, but the money was used to fund entertainment, personal shopping, and lavish expenses. The lawsuit reveals two major cases, including the theft of millions from investors, among them U.S. Navy veterans.

The U.S. Securities and Exchange Commission (SEC) has filed serious charges against private fund managers who allegedly defrauded investors of millions of dollars. The managers promised investors they would purchase exclusive pre-IPO shares in leading technology companies such as SpaceX and OpenAI. In reality, the money never reached these companies but was used to fund the managers' lavish lifestyles, including expensive entertainment and personal shopping. In one prominent case, the SEC is suing a manager who allegedly raised at least $18.5 million from about 100 investors and pocketed at least $1.27 million. According to the lawsuit, he used investor funds to pay an $18,000 bill at a club and even transferred money from the fund account to the club manager under the heading "opera tickets." In another instance, he charged inflated fees of $168,000 for a fund that promised to invest in OpenAI but did not hold its shares, and used the money for landscaping at his home. In the second case, criminal charges were filed against two managers who defrauded 35 investors, including U.S. Navy veterans, of more than $8.7 million. The two promised extraordinary returns of 153% and shares in companies like SpaceX, xAI, and others. In practice, their fund lost money in 13 out of 14 months of operation, and most of the funds raised were lost in options trading or stolen. The SEC now seeks to impose heavy fines and permanently bar them from the financial industry.