Former Texas-Based Investment Adviser Sentenced to 11 Years in Prison After Defrauding Investors, Including NFL Player, Travis Kelce, Out of Millions

Last week, Siddharth Jawahar was sentenced to 11 years in prison and ordered to pay $31.35 million in restitution for running a Ponzi scheme and defrauding investors in Texas and elsewhere out of millions of dollars.

In 2022, staff of the Texas State Securities Board, revoked the registration of Jawahar's investment company, Swiftarc Capital, LLC as an investment adviser in Texas after discovering that Jawahar, through his registered firm and acting as the investment adviser representative to a private fund, Swiftarc Fund, LP, was engaging in fraud by overvaluing an illiquid, sizeable position in Philip Morris Pakistan (PMP)-and misrepresenting profits earned to investors.

Jawahar instructed the Fund's administrator to report the value of PMP at 4,000 rupees per share on its investor reports rather than the price listed on the fund's brokerage account statements-a valuation significantly higher than the actual price at which PMP was being thinly traded. In reality, during this time, PMP experienced a steep decline in trading price from 3,230 rupees per share in September 2019 to 1,760 rupees per share in May 2020. And as of the date the Securities Commissioner for the State of Texas entered the order, PMP was trading at a price of 541 rupees per share.

This overstated net asset value resulted in complications with respect to investor redemptions. As requests came in, the Fund could not sell PMP at a share price of 4,000 rupees. In fact, selling any shares would have driven the price down further. The Fund was effectively illiquid.

Since the Fund's positions were illiquid and it had nearly $5,000,000 in outstanding redemption requests, it needed to generate cash. And how did it do that? It solicited new investors and used those new investor funds to make Ponzi-like payments to other investors to satisfy their redemption requests.

Following the investigation by the Staff and the entry of the order by the Securities Commissioner, the Staff referred the matter to the U.S. Attorney's office and the FBI in Missouri after identifying NFL player, Travis Kelce, as an investor. The Staff provided the U.S. Attorney's Office and the BFI with all its records and provided valuable insight to their investigation.

Deputy Securities Commissioner, Cristi Ramón Ochoa, worked the initial investigation and drafted the ultimate revocation order which also ordered Jawahar and Swiftarc to cease and desist from engaging in fraud in Texas.

"This is another great example of state and federal agencies working together to seek justice," said Ramón Ochoa. "The quick referral out and the breadth of the work done by our Staff played a pivotal role in his ultimate sentencing. In Texas, one of our top priorities is to foster investor confidence-and how do we do that? By making sure bad guys like Jawahar get taken out of the industry."