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The U.S. Securities and Exchange Commission informed on Wednesday that it has received a court order freezing the assets of investment advisor Ash Narayan. Narayan was charged with secretly draining money from his managed accounts for professional athletes and invested them in a struggling online sports and entertainment ticket business, where he officially worked.

Among the popular athletes, who lost money due to Narayan, are for example NFL quarterback Mark Sanchez or MLB pitchers Jake Peavy and Roy Oswalt. Part of Narayan’s tactique was to point to Christian faith.

The SEC officially charged Narayan, of Newport Coast, California, along with The Ticket Reserve Inc., CEO Richard M. Harmon, and chief operating officer John A. Kaptrosky and it obtained a court order on May 24, 2016 to freeze the assets of the defendants. According to the SEC’s complaint, Narayan transferred more than $33 million from clients’ accounts to The Ticket Reserve, typically without being aware of it or giving consent.

According to the SEC’s complaint, The Ticket Reserve also performed Ponzi-like payments to existing investors, taking money from new investors. The SEC secured the court-ordered asset freeze before Narayan could make a planned financial transaction on May 31.

Mr. Narayan has worked cooperatively with the SEC from the beginning on this matter, and is disappointed that the SEC decided to act like this.  Mr. Narayan said that he will continue to work with the SEC to ensure that this matter is resolved in the most favorable manner for those clients.

Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office said:

“We allege that Narayan exploited athletes and other clients who trusted him to manage their finances. He fraudulently funneled their savings into a money-losing business and his own pocket . The asset freeze stops the uncontrolled spending of investor assets within The Ticket Reserve until the case is resolved, preserving money that rightfully belongs to Narayan’s clients.”

SEC’s complaint:

  • Narayan was a managing director in the California office of Dallas-based investment advisory firm RGT Capital Management.
  • Narayan’s clients trusted and relied upon Narayan to pursue safe, conservative investments that would not put their principal at risk, realizing that as professional athletes with injury risks, their earnings might occur within a short window.
  • Besides failing to disclose the bulk of The Ticket Reserve investments to his clients and the fees he was receiving in exchange for investing their money, Narayan failed to disclose other key conflicts of interest—including that he was a member of The Ticket Reserve’s board of directors and owned more than three million shares of company stock. Narayan also falsely claimed to be a CPA.
  • Harmon and Kaptrosky participated in the scheme by making undisclosed finder’s fee payments to Narayan out of his clients’ funds and covertly describing them as “director’s fees” and “loans” in various company documents.
  • Harmon and Kaptrosky approved and executed Ponzi-like payments, falsified and backdated documents, and created sham promissory notes between The Ticket Reserve and Narayan in attempts to further conceal the scheme.

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