BOSTON – Tanmaya Kabra, the owner of several Boston-based investment companies, was arrested on Sunday at Logan Airport on charges of operating a Ponzi-like fraud scheme, US District Attorney General’s office said in a statement.
Kabra, 25, who resided most recently in Weehawken, N.J., was charged in a criminal complaint unsealed on Monday with wire fraud and bank fraud.
According to the criminal complaint, Kabra conducted business through a company called LaunchByte.IO LLC and several affiliated companies. He held himself out to investors as a successful serial entrepreneur, venture capitalist, and angel investor in start-up companies, the statement said.
Offering lucrative and low or no-risk returns on investments, Kabra allegedly lured investors with representations that their funds would be used to foster the growth and development of start-up companies, to prepare those companies for sale, or for other legitimate business opportunities.
In reality, Kabra used the money that he received from investors to pay off existing debts to prior investors in his scheme and to fund his lavish personal expenses, the statement said.
The charge of wire fraud provides for a maximum sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of bank fraud provides for a sentence of up to 30 years in prison, three years of supervised release and a fine of $1 million or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement on Monday. The Securities & Exchange Commission provided valuable assistance in this investigation. Assistant U.S. Attorney of Lelling’s Criminal Division Chris Looney is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.