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Court freezes San Diego firm’s funds after SEC accuses it of fraud
By Sue Asci
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(August 21, 2009 - Friday) - The Securities and Exchange Commission yesterday received a court order from the U.S. District Court for the Southern District of California to freeze the assets and halt alleged ongoing securities fraud by MAK 1 Enterprises Group LLC of San Diego.
In its complaint, the SEC alleged that owner Mohit A. Khanna claimed to have raised $70 million from 300 investors through his company, MAK 1 Enterprises — which provides business solutions, and wealth preservation and enhancement through consulting and private portfolio management, according to its website — and used the money to buy cars and homes.
In reality, the SEC charges, the average daily balance in the account never exceeded $197,000.
The SEC believes that Mr. Khanna raised at least $5 million and that total could go much higher, according to Diana Tani, the assistant director of the SEC’s regional office in Los Angeles.
The complaint alleged that Mr. Khanna and his company solicited investors in California and several other states and claimed to pool the funds to invest in commercial paper, foreign currency trading products and other guaranteed investments, the SEC said in a statement.
But the investment products were non-existent and Mr. Khanna used the money to buy luxury cars and residential properties, the SEC alleged.
At the same time, Mr. Khanna and his company falsely claimed that accounts would be insured by the Federal Deposit Insurance Corp., the Securities Investor Protection Corp. and insurance policies purchased by the firm, the SEC charged.
The complaint also named Mr. Khanna’s wife, Sharanjit, and another company that he controls, First Opportunities Management Group Inc. of San Diego, as relief defendants as they allegedly “received ill-gotten gains” from the fraud, the SEC statement said.
Mr. Khanna was barred in 2004 by the Financial Industry Regulatory Authority Inc. of New York and Washington, the statement said.
The defendants are charged with violating the antifraud and securities registration provisions of the federal securities laws.
Mr. Khanna was not immediately available for comment.
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