Harvard Business School graduate targeted alumni in pyramid scheme, New York attorney general says

A Harvard Business School graduate is accused of targeting his own alumni and tricking them into investing in a pyramid scheme.

In a court order filed this week, New York State Attorney General Letitia James accuses HBS graduate Vladimir Artamonov of defrauding investors of $3 million. Mr James called on investors who lost money to file complaints.

James’ office alleges that Artamonov used his HBS network to court investors in a Ponzi scheme that defrauded at least $2.9 million from at least 29 people, many of whom were affiliated with HBS. are doing.

A Ponzi scheme is a type of investment fraud involving promoters who promise risk-free, high returns and pay investors with new backers’ funds rather than their investment profits. This type of scheme does not generate income but relies on a constant flow of new capital to survive.

The New York State Legislature secured a court order effectively halting Mr. Artamonov’s alleged scheme. Her office said she became aware of the activity after receiving a call from an early investor who took her own life after learning she had lost $100,000 in funding.

“Even after the tragedy, Mr. Artamonov continued to solicit new investors and lied about the fund’s strategy and performance,” James’ office said in a statement.

Anyone can be deceived

This case highlights that even people with prestigious backgrounds in business and finance can be tricked into making unfavorable investment decisions, especially when presented with an opportunity by a trusted party. I have to.

“Even sophisticated investors can be fooled by fraudsters, especially when they use personal relationships or networks to create a false sense of trust,” Attorney General James said in a statement Thursday. Stated. “Vladimir Artamonov used his position as a Harvard Business School graduate to appear legitimate and trustworthy while preying on his classmates and others.Instead, he “They have defrauded people of their investment money, with dire consequences. Today, we have put a stop to this scheme. “And I urge anyone who has been defrauded to come forward to my office. ”

Artamonov graduated from HBS in 2003 with a master’s degree in business administration and then moved to New York to work as a securities professional. He called his own investment fund “Project Information Arbitrage” or “Artamonov Fund”.

When courting potential investors, he claimed to have advance knowledge of Berkshire Hathaway’s investment decisions through public state insurance filings. He likened his insights to “having a private time machine” and “getting tomorrow’s newspaper today,” and predicted the fund’s return would be between 500% and 1,000%, according to the AG.

“In reality, Artamonov used investor funds to purchase short-term options that expired within days of purchase and appeared to have no connection to Berkshire Hathaway or its investment activities.” said the AG’s office, adding that Artamonov was financing Berkshire Hathaway’s lavish lifestyle. He is himself using investors’ money.

James’ court order requires Artamonov to testify and produce books and records to guide the ongoing investigation.

Harvard Business School declined to comment on the matter when contacted by CBS MoneyWatch.