Indian-American Sohrab “Sam” Sharma, 26, and Robert “Bob”Farkas, 31, two co-founders of a start-up called Centra Tech, Inc. (“Centra Tech”), were charged March 31, in Manhattan federal court with conspiring to commit, and committing securities and wire fraud. Prosecutors say their alleged scheme induced victims through “material misrepresentations and omissions,” to invest more than $25 million, according to an April 3 press release from the U.S. Attorney from the Southern District of New York.
Sharma and Farkas, both residents of Florida, were arrested March 31, evening in the Southern District of Florida and were presented yesterday in that District. The allegations in the Manhattan Complaint filed March 31 in the court of Magistrate Judge James L. Cott, are accusations, and the defendants are presumed innocent unless and until proven guilty.
Each is charged in a four-count criminal complaint with one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison; one count of securities fraud, which carries a maximum potential sentence of 20 years in prison; and one count of wire fraud, which carries a maximum potential sentence of 20 years in prison.
According to the allegations in the criminal complaint unsealed in Manhattan federal court: from July 2017 through March 2018, Sharma and Farkas, allegedly began soliciting investors to purchase Centra Tech tokens, a bespoke cryptocurrency that functions as an unregistered security in Centra Tech, through a so-called “initial coin offering” or “ICO.” In oral and written offering materials that were disseminated via the internet, the two allegedly represented that Centra Tech had developed a debit card, the “Centra Card,” that allowed users to load the Centra Card with the cryptocurrency of their choice and then use the Centra Card to make purchases at any establishment that accepts Visa or Mastercard; that they allegedly represented that Centra Tech had formed a partnership with Bancorp to have Bancorp issue Centra Cards licensed by Visa or Mastercard, and that Centra Tech held the requisite financial servicing licenses in 38 states, among other claims. Based in part on these claims, alleged victims provided more than $25 million in investments for the purchase of Centra Tech tokens.
“The claims that SHARMA and FARKAS made to help secure these investments, however, were false,” prosecutors said in the press release
In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against Sharma and Farkas.