As the old saying goes, "Beware of small-time hedge fund managers bearing pre-IPO shares of Uber and promising fixed returns to Average Joe investors."
Gill and Rios solicit middle-class investors with promises of “access to alternative investment strategies that were previously only available to the one-percenters.” In so doing, Gill and Rios falsely portray JSG as an authentic and prosperous investment firm, and lull investors into believing that their money is safe and secure. For example, defendants claim that investor money is invested in the stock market, and JSG’s website touts its “customized asset allocation strategy,” actively-managed client portfolios “using a broad array of securities” and JSG’s performance relative to well-known benchmarks. JSG’s investor contracts represent that the investments are secured by assets held at established brokerage firms, and that investors are additionally secured against losses by an insurance policy. Gill has also touted his background as a Managing Director at Morgan Stanley and supposed “close ties” with well-known Silicon Valley venture capital firms that provided JSG access to shares in popular “pre-IPO” companies.
But was this just a matter of two hungry young asset managers getting a little ahead of themselves? In every case like this, there is a nugget of honesty, right?
In reality, JSG is a classic investment scam and Ponzi scheme. Gill and Rios
transferred less than 1 percent of investor funds to JSG Entity brokerage accounts, and no “pre-IPO” company shares were ever purchased. The JSG Entities do not hold any accounts at one of the brokerage firms, are not a policyholder of the insurance policy they claim to be, and JSG’s account at the other brokerage firm has never held more than $5,000. Gill has never worked for Morgan Stanley, and neither JSG nor Gill has any relationship with any of the Silicon Valley venture capital firms touted on JSG’s website.
What monsters! Who lies about working at Morgan Stanley?
But for a couple of frontier-thinking Ponzi schemers, Gill and Rios are a real pair of hackneyed sybarites.
Instead, Gill and Rios have used millions in investor money to fund their lifestyle, and to make Ponzi payments to earlier JSG investors. Gill has received over a million dollars of investor money in cash withdrawals, transfers to his personal bank account, the monthly rent at his personal residence, and the use of an expense account to pay for excursions to high-end restaurants and clubs, jaunts to Las Vegas casinos, gentlemen’s clubs, professional sporting events, high-end hotels, and luxury retail stores.
Ball games, casinos and strippers? Really, guys?
For that kind of vanilla hedonism, you could have just sold fake shares in Etsy or Yahoo.