SEC Seeks to Halt North Carolina-Based Ponzi Scheme

The Securities and Exchange Commission has taken urgent action to put a stop to an alleged Ponzi scheme orchestrated by Nayeem Choudhury, a resident of Durham, North Carolina, and his hedge fund, Dream Venture Capital Group LLC. In a complaint filed with the United States District Court for the Middle District of North Carolina, the SEC revealed that Choudhury deceived investors by claiming to offer a risk-free investment opportunity in his hedge fund and falsely promoting its exceptional performance.

Contrary to his claims, Choudhury’s actual track record consisted of consistent monthly trading losses amounting to six and seven figures. Between August 2022 and June 2023, Dream Venture suffered losses exceeding $4.8 million in options trading. The complaint further alleges that Choudhury misappropriated investor funds by using money from new investors to repay existing ones and covering personal expenses with fund assets. Notably, in May 2023, he purchased a luxury car worth $85,000 using these funds. Despite receiving approximately $3.5 million from investors since July 2022, Choudhury and Dream Venture failed to fully reimburse their clients.

The SEC’s Complaint charges Choudhury and Dream Venture with multiple violations, including the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. It also accuses Choudhury of violating sections of the Investment Advisers Act of 1940. Seeking legal recourse, the SEC aims to freeze the defendants’ assets, obtain a temporary restraining order, secure preliminary and permanent injunctions, impose a conduct-based injunction, require the disgorgement of ill-gotten gains along with prejudgment interest, and levy civil penalties.

The SEC’s investigation into this matter is ongoing and is being conducted by Josh Hess, Tiffany Kunkle, and Robert Nesbitt, under the supervision of Matthew McNamara and Justin Jeffries. Edward Sullivan will lead the SEC’s litigation efforts.