Goyal cheated family members and friends too.
AB Wire
NEW YORK: An Indian American investment manager based in Chicago, Neal Goyal, 34, who fraudulently obtained millions of dollars from investors, including friends and family members, in a sophisticated Ponzi scheme to fund his extravagant lifestyle was sentenced to 72 months in federal prison.
Goyal, who was the sole managing member and founder of Blue Horizon Asset Management, LLC, and Caldera Advisors, LLC, was also ordered to pay more than $9.2 million in restitution by U.S. District Judge Matthew F. Kennelly, last week.
Goyal, who pleaded guilty in February to one count of wire fraud, was ordered to surrender to begin serving his sentence on September 17, 2015.
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“Goyal was running a Ponzi scheme and he stole much of his investors’ money to prop up his extravagant lifestyle,” Assistant U.S. Attorney Kenneth Yeadon argued in a government sentencing memorandum, according to the Federal Bureau of Investigation. “There is no justification for the crimes that Goyal committed other than his own desire to place his own self-interests in front of the interests of his investors.”
From 2006 to 2014, Goyal perpetrated the scheme by setting up a fake trading shop on Michigan Avenue in Chicago in order to fool his investors into believing that his trading strategy generated market-beating returns.
Goyal concealed his scheme by using existing investor money to repay investors, and by creating and distributing false account statements. Many of the duped investors were Goyal’s friends and family members.
Last year, the U.S. Securities and Exchange Commission had filed a parallel civil fraud lawsuit against Goyal and obtained a court order freezing the assets of Goyal and his funds. The SEC suit alleges that Goyal stole his investors’ money to fund his own lavish lifestyle, to pay business expenses, and to support a variety of personal business ventures including a bar and two children’s clothing boutiques that his wife operates in Chicago.
Beginning in early 2006, Goyal represented that funds invested in the Blue Horizon funds would be used for long and short trading in equities, options, and other securities. By June 2006, Goyal began sending false account statements to investors that inflated the financial results from trading purportedly being done by those funds, the charging document alleges.
By the first half of 2008, Goyal allegedly knew that he intended to misuse the funds for himself and to make Ponzi-type payments to certain investors. By January 2009, Goyal had stopped trading for two Blue Horizon funds and had not traded at all for the third Blue Horizon fund. In February 2009, Goyal allegedly began engaging in a similar fraud scheme with investments in the Caldera Equity Fund.