“Venture Capital” Investor Tanmaya Kabra Busted for Alleged Ponzi Scheme

August 8, 2019 | News, Venture Capital
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Prosecutors say a 25-year-old he used investors’ money to buy a boat and pay off credit cards.

Tanmaya Kabra told clients he was a Venture Capital investor and serial entrepreneur.

He ran a company called Launchbyte.IO that – on the surface – invested in tech startups as venture capital funds do.

Kabra allegedly told investors they could make double-digit gains through the startups that he operated. The 25-year-old Babson college graduate was doing so well… he even bought a boat.

You know how this ends… right?

The Tanmaya Kabra Investigation

On August 6, the SEC filed an emergency action charging Kabra for defrauding retail investors and using their money to buy a  $200,000 boat and pay off $80,000 in credit card debt. Authorities arrested Kabra at Logan Airport in Boston last Sunday. United States Attorney Andrew Lelling told Boston media that Kabra had allegedly passed himself off as a successful entrepreneur and angel investor.

The criminal complaint says that Kabra and Launchbyte “defrauded” at least four investors, although several Boston entrepreneurs claim to be victims as well, according to a report from Bostinno.

More Details on the SEC’s Case

The SEC alleges that all investments promised by Kabra to investors were fabrications. In addition, Kabra used some investor funds to pay back previous investors through “Ponzi-like” distributions. The complaint alleges that Kabra promised returns of up to 32%.

The complaint also states Kabra told an investor that one of Launchbyte’s investments was about to be acquired. However, the complaint states that the firm wasn’t in discussions about selling to anyone.

Potential Prison Time

Meanwhile, the U.S. Attorney’s Office for the District of Massachusetts announced on August 5, 2019, criminal charges against Kabra for wire and bank fraud.

If found guilty for the wire fraud charge, the 25-year-old faces a maximum sentence of up to 20 years in prison. He also faces three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater.

The bank fraud charge carries a maximum sentence of up to 30 years in prison. The charge also carries up to three years of supervised release and a fine of $1 million or twice the gross gain or loss, whichever is greater.

For more, the criminal complaint is available here.

 

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