Indian descent investment adviser admits to $9M Facebook stock fraud

New York, Aug. Aug 14 (IANS) An investment adviser of Indian descent has admitted to a $9million-fraud involving Facebook stock Thursday, the Federal Bureau of Investigation announced.

Gignesh Movalia, the founder of OM Global Investment Fund, pleaded guilty in Tampa before Federal Magistrate Judge Anthony E. Porcelli to one count of investment advisor fraud. He is to be sentenced later.

Federal Prosecutor A. Lee Bentley III said Movalia solicited investments in his fund claiming that he could get shares of Facebook before its initial public offering. He raised more than $15 million, of which $9 million was buying Facebook shares. However, Bentley said in a statement, Movalia used the $9 million for other investments and hid this from the investors.

Ultimately, OM Global Investment Fund lost $9 million and went broke, Bentley said.

Last year in June in a separate civil suit filed by the Securities and Exchanges Commission, Federal Judge Jose E. Martinez in Miami ordered Movalia and OM Investment fund to pay up $1.729 million in illegal profits and fined him $300,000.

In additon to the Facebook stocks fraud, the SEC had also accused him of making improper loans to third parties and creating an institution with a name similar to OM Investment Funds to evade monitoring by a Florida state court and using it to solicit funds.

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