A Carlsbad stockbroker pleaded guilty Tuesday to bilking investors out of more than $6 million through risky investments that turned into a classic Ponzi scheme.
Rather than invest much of the money, 66-year-old Sunil Sharma used $2.5 million in investor funds for the down payment on home, a $12,000 cruise in the Mediterranean and leases on a Mercedes and a BMW, according to federal prosecutors.
Sharma was making risky day trades while telling investors that their investments were doing well, prosecutors said. He allegedly sent false monthly and quarterly statements to investors.
He held seminars, telling would-be investors that his Gold Coast Holdings could help them earn a safe retirement income through a diversified portfolio and bonds from emerging markets. Another of his alleged creations was called Safe Harbor Tax Lien Acquisitions.
The funds were managed by Goldman Sachs, Sharma falsely told clients, according to court documents.
The scheme became a classic Ponzi, with money from new investors providing profits for older investors and giving the false impression that the investments were real, according to court documents.
By December 2014 he had run out of funds and was unable to make a monthly payout in January, prosecutors said.
U.S. Atty. Laura Duffy said that investors "must exercise due caution before turning over money even to longtime friends or else what appears to be a safe harbor might turn into a shipwreck."