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Firm, chief executive ordered to pay $13.7 million in restitution to 59 investors
Finra has barred a broker-dealer and its founder for allegedly defrauding a number of current and former NFL and NBA players out of nearly $14 million as part of a Ponzi scheme.
The Financial Industry Regulatory Authority Inc. expelled Success Trade Securities, an online brokerage, and its founder, Fuad Ahmed, for raising money for the company parent company, Success Trade Inc., through purportedly fake promissory notes.
The notes typically had a 12.5% interest rate and had a term of 36 months, according to Finra. Because of the financial condition of the parent company, there was little chance they would be paid back, Finra said. Instead, the funds went to pay Mr. Ahmed’s personal expenses, including the lease on a Range Rover and balances on personal credit cards and clothes, Finra alleged.
A report from Yahoo Sports last year noted that clients who bought Success Trades’ notes included Detroit Pistons guard Brandon Knight, Cleveland Browns cornerback Joe Haden, San Francisco 49ers tight end Vernon Davis, former Washington Redskins running back Clinton Portis and Chicago Bears defensive end Adewale Ogunleye.
When the notes became due, Mr. Ahmed attempted to persuade the investors to extend the terms, in some cases promising that the company would be listing on a European stock exchange soon.
Mr. Ahmed raised money for the notes through Jinesh Brahbhatt, a broker who also ran a registered investment advisory firm known as Jade Private Wealth Management. The firm targeted professional athletes who were waiting to be drafted, according to Finra.
Success Trade then paid Mr. Brahbhatt $1.25 million from the funds, according to the decision. Mr. Brahbhatt was barred in November for failing to testify in the case against Success Trade.
“There are a lot of elements about that which are in dispute, including whether those were payments or loans,” said Mr. Brahbhatt’s attorney, Alan Futerfas. “We were not participants in this proceeding, so we did not have an opportunity to put evidence before the panel or address assertions made by either Finra personnel or Fuad Ahmed.”
An attorney for Mr. Ahmed, William C. “Skee” Saacke, did not immediately return a request for comment.