Indo-Canadian sentenced in U.S. for running $7.5 M Ponzi scheme

The Department of Justice (DOJ) logo is pictured on a wall after a news conference to discuss alleged fraud by Russian Diplomats in New York December 5, 2013. REUTERS/Carlo Allegri

A Canadian national of Indian ethnicity, was sentenced Aug. 12, 2019,  to 87 months in federal prison for running a $7.5 million Ponzi scheme in which he defrauded investors by posing as a successful beverage entrepreneur with close ties to well-known business executives and professional sports stars, including NBA star Stephen Curry.

United States District Judge Dale S. Fischer sentenced Khemraj Dave Hardat, 50, a former resident of the Ritz-Carlton Residences at L.A. Live in downtown Los Angeles who has been in federal custody since his arrest last November, Judge Fischer said Hardat was “not a misguided businessman; he was a very skillful fraudster,” according to a press release from the U.S. Attorney for the Central District of California.

Hardat was sentenced after pleading guilty on April 22 to five counts of wire fraud. When he pleaded guilty, Hardat admitted that, from August 2014 through November 2018, he raised money from investors by falsely holding himself out as a successful investor and businessman in the performance beverage and water-bottling industries.

Hardat duped his investors by falsely representing that he had a doctorate and that he maintained relationships with established business figures such as computer entrepreneur Michael Dell and the CEO of PepsiCo who was Indian-American Indra Nooyi during those years.

Hardat falsely claimed that professional basketball star Stephen Curry would be endorsing one of his company’s products, and that PepsiCo and Dr. Pepper Snapple Group, Inc. owed him more than $100 million as the result of purported business deals he had consummated with them.

The Indo-Canadian supported his bogus claims of financial success by showing victims doctored digital images of bank account statements showing inflated balances. One fraudulent image emailed to a victim showed a balance of nearly $500 million in one bank account, while another phony image showed a bank account balance of nearly $170 million.

In reality, Hardat used investor funds to pay off his personal debts, purchase luxury cars worth more than $100,000 each, pay rent at the Ritz-Carlton Residences, pay tuition to exclusive private schools, and purchase luxury boxes and tickets for sporting and entertainment events. He also admitted that, in the style of a Ponzi scheme, he made payments to prior victim-investors out of subsequent victim-investors’ money.

According to prosecutors, during the course of the scheme, Hardat took in approximately $7.5 million from investors, who suffered losses of more than $6.4 million.

“Fleeing the fallout and escaping the consequences of frauds he perpetrated in Canada, defendant immigrated to the United States, where he overstayed his visa and reconstituted his lucrative, luxurious life of financial crime,” prosecutors wrote in a sentencing memorandum quoted in the press release. “[Hardat] befriended neighbors, fellow parents at his children’s school, and entrepreneurial would-be co-venturers, whose trust, loyalty, and hopes he carefully nurtured, only to betray them at the earliest opportunity,” prosecutors added.



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