Chicago investment fund manager Neal V. Goyal charged with fraud by SEC and U.S. Attorneys

It is very important to research and conduct due diligence before investing money with fund managers who look, walk and talk the part but who might be a wolf in sheep’s clothing.

It is very important to research and conduct due diligence before investing money with fund managers who look, walk and talk the part but who might be a wolf in sheep’s clothing.

The Securities Exchange Commission (“SEC”) charged Chicago investment fund manager, Neal V. Goyal, for the Ponzi scheme in which he used investor monies to purchase himself houses and businesses for him and his wife. SEC fraud charges also named Blue Horizon Asset Management and Caldera Advisors, Goyal’s firms. The U.S. Attorney’s Office for the Northern District of Illinois is also prosecuting Goyal. In a common course of action the judge in a federal district court ordered Goyal and his business assets frozen pending investigation and prosecution of criminal charges.

The SEC complaint states that at least 35 people invested in Goyal’s funds. He told investors their money was invested in equities and were “significantly outperformed the market.” The complaint stated that Goyal “never invested the vast majority of the money he raised from investors, and the limited trading that Goyal did perform was unsuccessful and resulted in significant losses.” You would imagine the clients would have been alarmed at the losses but they never knew because Goyal sent them false statements that made it look like the investors were making money. In a “Ponzi-scheme fashion, by using later investors’ money to meet the distribution requests of prior investors,” Goyal was able to keep clients happy while skimming the cash flow to fund his lavish lifestyle, to pay expenses and support personal businesses including, “a bar and two children’s clothing boutiques that his wife operates in Chicago.”

Many of the people who engage in fraud schemes gain the trust of respected members of the communities where they live and work. Since they spend money like successful fund managers, most people do not assume any wrongdoing or fraud until there are signs that money is missing. Building trust and friendship with investors also helps insulate the schemers from suspicion.

“From the beginning of his scheme, Goyal lied to investors and created fake account statements portraying positive trading returns in order to gain their trust and attract additional investments,” said David Glockner, director of the SEC’s Chicago Regional Office.  “Goyal’s limited trading was unsuccessful, and he stole the vast majority of the money he raised.” Read more in the SEC Press Release dated May 29, 2014.

The SEC’s complaint against Goyal and the two advising companies he owned and controlled, charges them with violations of anti-fraud provisions of the Securities Act of 1933, Securities Exchange Act of 1934 and Rule 10b-5, and Investment Advisers Act of 1940. Judge Rebecca R. Pallmeyer ordered a freeze of Goyal’s assets and accounts as a preliminary measure to preserve what assets if any remain that could be recaptured to reimburse defrauded investors.

As there are updates in this case we will report on them to you. Our law firm represents victims of financial fraud and we work to increase awareness of fraudulent activity and highlight the types of crimes. It is very important to research and conduct due diligence before investing money with fund managers who look, walk and talk the part but who might be a wolf in sheep’s clothing.

If you are interested in learning more about Michael V. Favia & Associates, serving Chicago and its suburban communities, please visit the Favia Law Firm website for resources and articles of interest. To contact the firm to speak to a lawyer about a healthcare-related concern, you may dial (773) 631-4580. For more information about the firm’s practice areas, you can also visit the firm’s Facebook and Twitter sites. Please “LIke” and “Follow” respectively to keep in touch!

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