Virginia Engineer Sentenced in $15.6M Investor Fraud Scheme
Wednesday, Oct 30, 2024 2:05 pm ET
1min read A Virginia engineer, Babu Ramaraj, was recently sentenced to seven years and six months in federal prison for his role in a $15.6 million investment fraud scheme. Ramaraj, a 47-year-old resident of Aldie, Virginia, pleaded guilty to one count of wire fraud and one count of conducting an unlawful monetary transaction. He was also ordered to pay over $15.6 million in restitution and forfeit his interests in fraud-related and money laundering-related assets, including properties and vehicles.
Ramaraj owned DAB Inspection and Consulting Services LLC, a small home contractor primarily doing residential deck and patio renovations. However, he used his business to operate an investment scheme, claiming that DAB had lucrative contracts with the Federal Aviation Administration, the Virginia Department of Transportation, and others, for tens of millions of dollars each. He purported to need large upfront bond payments to secure the work, convincing investors to loan funds at high interest rates, annualized at 30% or more.
To support his claims, Ramaraj supplied falsified contract award letters, invoices, financial records, and other documents to induce dozens of investors in at least five states to lend funds. Instead of using the funds for bonds, Ramaraj transferred investor money to his online brokerage accounts, wired over $1 million to accounts in India, purchased luxury vehicles, obtained real properties, and made other payments to fund his lifestyle. He took in nearly $40 million and caused losses to investors of approximately $15 million.
Ramaraj's scheme persisted for over four years, from January 2020 until his arrest in May 2024. He exploited his social connections, particularly members of his Loudon County cricket league, to recruit investors. By targeting individuals who knew him through cricket, Ramaraj could present a more convincing facade, making it easier to persuade them to invest. This strategy, known as "affinity fraud," is common in Ponzi schemes, as it exploits personal relationships to overcome initial skepticism.
In addition to the criminal charges, the Securities and Exchange Commission (SEC) filed a civil complaint against Ramaraj in July 2024, alleging that he defrauded more than 70 investors of approximately $31 million. The SEC's complaint charges Ramaraj with violating antifraud provisions of the federal securities laws and seeks an injunction, disgorgement, penalties, and an officer-and-director bar.
Ramaraj's case serves as a stark reminder of the dangers of investment fraud and the importance of due diligence when considering investment opportunities. Investors should be cautious of promises of high returns, particularly when they seem too good to be true. It is crucial to verify the credentials of the individuals and companies involved, as well as the legitimacy of the investments being offered. By staying informed and vigilant, investors can better protect themselves from fraudulent schemes like the one perpetrated by Babu Ramaraj.
Ramaraj owned DAB Inspection and Consulting Services LLC, a small home contractor primarily doing residential deck and patio renovations. However, he used his business to operate an investment scheme, claiming that DAB had lucrative contracts with the Federal Aviation Administration, the Virginia Department of Transportation, and others, for tens of millions of dollars each. He purported to need large upfront bond payments to secure the work, convincing investors to loan funds at high interest rates, annualized at 30% or more.
To support his claims, Ramaraj supplied falsified contract award letters, invoices, financial records, and other documents to induce dozens of investors in at least five states to lend funds. Instead of using the funds for bonds, Ramaraj transferred investor money to his online brokerage accounts, wired over $1 million to accounts in India, purchased luxury vehicles, obtained real properties, and made other payments to fund his lifestyle. He took in nearly $40 million and caused losses to investors of approximately $15 million.
Ramaraj's scheme persisted for over four years, from January 2020 until his arrest in May 2024. He exploited his social connections, particularly members of his Loudon County cricket league, to recruit investors. By targeting individuals who knew him through cricket, Ramaraj could present a more convincing facade, making it easier to persuade them to invest. This strategy, known as "affinity fraud," is common in Ponzi schemes, as it exploits personal relationships to overcome initial skepticism.
In addition to the criminal charges, the Securities and Exchange Commission (SEC) filed a civil complaint against Ramaraj in July 2024, alleging that he defrauded more than 70 investors of approximately $31 million. The SEC's complaint charges Ramaraj with violating antifraud provisions of the federal securities laws and seeks an injunction, disgorgement, penalties, and an officer-and-director bar.
Ramaraj's case serves as a stark reminder of the dangers of investment fraud and the importance of due diligence when considering investment opportunities. Investors should be cautious of promises of high returns, particularly when they seem too good to be true. It is crucial to verify the credentials of the individuals and companies involved, as well as the legitimacy of the investments being offered. By staying informed and vigilant, investors can better protect themselves from fraudulent schemes like the one perpetrated by Babu Ramaraj.
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