A venture capital fund manager from Buffalo was charged Friday with fraud in connection with a “Ponzi-like scheme” involving millions of dollars, according to a statement by the federal Securities and Exchange Commission.
Gregory W. Gray Jr., no age listed, and his firms, Archipel Capital LLC and BIM Management LP, are accused of soliciting investment money from “pre-IPO shares of Twitter that would be delivered to investors with profits once the company went public,” the SEC stated.
Federal officials reported that Gray bought 80,000 shares of Twitter before it went public in November 2013 – despite the fact he had raised about $5.3 million from investors, enough to buy about 230,000 shares.
“Faced with increasing pressure from investors to deliver the promised shares and profits, Gray allegedly stalled and stole to make up the shortfall by tapping three other unrelated funds to pay investors in the Twitter-related fund,” according to the SEC statement.
Officials said Gray also “fabricated a document” in furtherance of the crime.
“Gray sold investors on a seemingly great idea to acquire pre-IPO shares of high-profile companies like Twitter and Uber at a low price,” said Andrew M. Calamari, the SEC’s regional director in New York. “But, rather than come clean when he failed to invest as promised, Gray stole from investors to cover his misdeeds.”
Gray faces charges of violating the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 as well as other violations, according to the SEC.