The US Securities and Exchange Commission (SEC) charged venture capitalist Iftikar Ahmed with fraud and self-dealing and has obtained an asset freeze on $55 million in Ahmed’s accounts, according to a complaint filed in US District Court in Connecticut on last Wednesday and unsealed today. The complaint alleges that Ahmed illegally profited off of funds he managed for Oak Investment Partners.
The SEC claims that Ahmed had Oak funds pay inflated prices for two e-commerce investments, failed to disclose his beneficial interest in a third related company, and transferred approximately $27.5 million in illegal profits to accounts under his control at the expense of the LPs.
According to the SEC's complaint, in one instance Ahmed directed Oak funds to pay $20 million for a $2 million stake in an Asian e-commerce joint venture, pocketing the $18 million difference for himself. In another deal, an Oak fund overpaid for shares in another e-commerce company, allowing Ahmed to pocket $2 million.
In a third transaction in 2013, Ahmed advised an Oak fund to invest $25 million in a US e-commerce company without disclosing his interest in I-Cubed Domains, which had a significant stake in the same company. The following year, at Ahmed's advice, the Oak fund paid $7.5 million to I-Cubed to buy shares in the company. The complaint alleges that Ahmed again failed to disclose his ties to I-Cubed, violating his duty to act in the best interest of the Oak fund investors and avoid self-dealing.
The complaint charges Ahmed with violating federal antifraud laws and related SEC antifraud rules. The SEC is seeking a preliminary injunction to continue the freeze of Ahmed's assets and seeks to have Ahmed return his ill-gotten gains with interest and pay civil monetary penalties.