Securities Arbitration Lawyers BlogSEC Order Asset Freeze For Nanban Ventures, LLC
Forensic financial research group Hindenburg Research has just published a new report on Nanban Ventures. This Frisco, Texas-based “investment” company is concentrating its marketing in the Indian American community of the Dallas-Fort Worth area.
Their extensive report details the marketing and the true information of one person and a series of companies aimed at drawing investors for a complicated Ponzi scheme targeting one ethnic group. Hindenburg Research and the SEC have caught up to the founders and are working to expose the individuals involved, correct the injustice, and hopefully help return at least some of the funds back to the unknowing investors.
Nanban Ventures GK Strategies
Nanban Ventures marketed their alleged investment scheme as friends helping friends. On one of its many websites is the quote, “’Nanban’ means ‘friend.’ A person you can trust. Someone who desires to help without seeking anything in return.”
Nanban CEO and founder Gopala Krishnan, known as “GK,” claims to have developed what he called the “GK Strategies” that work “100% of the time” and “consistently generate more than 100%” in returns while offering principal protection. He also claims that the strategies are “patented in the US,” but Hindenburg Research found no evidence of any patent. In one of his webinars, Krishna repeats the concept: “Nanban means a true friend who does the right thing without expecting anything in return.”
However, Krishnan and his co-founders have experience in IT but no prior professional experience in finance. Krishnan claims to have created a simple formula for success he calls the “GK Strategies” which he copyrighted. His methodology and the Nanban companies include trading, real estate, hedge funds, and pooled investment funds. All three men have profiles on LinkedIn.
With his collaborators, they also formed the Nanban Foundation, a 501(c)(3) non-profit organization, with the goal of “just to teach people how to make money.” Levels 1 and 2 were offered for free four times a year in 3-hour webinars over two weekends.
It’s A Ponzi Scheme
Krishnan, his Nanban co-founders, and their companies raised nearly $130 million from the Indian American community since April 2021. Unfortunately, the company’s financial picture isn’t as rosy as they described.
Hindenburg Research’s investigation revealed eight entities under the “Nanban” name, including land, healthcare, entertainment (with movies and other content), ESG (Environmental, Social, and Governance, or sustainable investing), and other types of investments.
One alleged investment highlighted by Hindenburg Research is the Nanban Chola LNG Plant, Pipeline & Port Project intended for 35,000 acres of land it allegedly owns in the US. The information is only on the Nanban website, with a picture purchased from Shutterstock depicting an Alaskan fishing village. The project is allegedly worth $30 billion and is “coming soon,” but no other information is available. The Nanban Chola project claims to have $72.2 Billion in “Total Project Pipeline Value.”
These websites, among others, have purported that Nanban has assets under management (AUM) of over $100 billion as of June 2023, including the alleged pipeline project. But in documents filed with the SEC this year, Nanban has only sold $115 million to investors, falling very short of their alleged AUM.
Participants were called “Nanbans.” In truth, the founders siphoned off invested funds and poured them into three founder-owned companies they called “fintech.” The $17.8 million in profits that paid “dividends” were from other investor funds in the classic Ponzi style.
The SEC Steps In
Fortunately, the SEC was aware of Nanban’s activities and stopped them. On October 5, 2023, the SEC filed a petition in the US District Court in the Eastern District Of Texas, Sherman Division. In it, the SEC requested to obtain emergency relief, freezing assets, and a temporary restraining order against several defendants to stop the ongoing fraud:
- Nanban Ventures LLC, and its three founders:
- Gopala Krishnan (aka “GK”)
- Manivannan Shanmugam
- Sakthivel Palani Gounder
- GSM Eternal LLC, aka Northstars Fintech
- Himalayan Fintech LLC,
- Centum Fintech LLC , aka Sunshines Fintech
Because the SEC acted quickly and froze the assets, financial recovery for Nanban’s victims may be possible.
Affinity Fraud
Silver Law Group founder attorney Scott Silver recently spoke with Investment News about affinity fraud, or frauds implemented into specific demographics of people. The idea is to become a part of a community and make people comfortable discussing financial matters so it’s easy to implement the scam and collect money from members.
In the discussion, Mr. Silver noted that those perpetrating the fraud send a message that “I would never cheat my own people.” Churches, synagogues, and other religious organizations are frequently the target of affinity scams. Others include a diverse group of organizations, such as school, social, or community groups like soccer or little league baseball teams, “friends of the library,” or university alumni. Affinity fraud targets people identified by specific demographics, such as age, education, religion, race, or nationality.
Spreading The Word To New Investors
Because affinity fraud targets specific groups, including immigrant and ethnic communities, they recruit the group’s leaders to disseminate information, endorse the product or service, and bring in more members and investors. They recruited new investors by word-of-mouth in the DFW Indian American community and through Krishnan’s YouTube channel. By being part of the community, fraudsters take advantage of a group’s nature to bring them into a fraudulent activity.
With Nanban, Krishan also recruited Dallas-based Spiritual Leader Swami Mukundananda from the Radha Krishna Temple to endorse the companies. Including a trusted spiritual leader means community members will be more likely to join in the investment.
This tactic resembles celebrity endorsements seen in other investment frauds such as FTX. Unfortunately, the person or persons recruited may not realize they are endorsing fraud and may even be a victim themselves.
Did You Invest In Nanban Ventures, LLC, Or One Of Its Subsidiaries?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.