2019 was supposed to provide retail investors the opportunity to share the wealth of Silicon Valley and Wall Street through the IPOs of some of the hottest tech unicorns. Whether it was Lyft or Uber, there was plenty of hype. Many of these companies, such as the aforementioned, as well as Chewy, The RealReal and Slack, are now all trading well below their highs and IPO prices. As usually is the case, the normal person loses while the insiders and Wall Street types make a killing.
New York business consultant Omar Khan is giving those who usually are on the receiving end of conveniently-timed wealth transfers a taste of their own medicine. In a lawsuit filed in New York State Supreme Court on Wednesday, it was revealed Khan bilked Wall Street heavy hitters out of millions via a wine party scheme.
The suit claims he lured people into his “Ponzi-like scheme" by wining and dining them before convincing them to invest in his growing events business. This doesn't seem much different than the IPO process but we digress. Court documents for the $8.3MM lawsuit reveal some of the scheme's victims come from companies such as Sanford C. Bernstein, Spurs Capital, Morgan Stanley and a former employee of Renaissance Capital.
As was the case with Elizabeth Holmes and many other famous swindlers, Khan's “elite supper club” received favorable write-ups in Forbes and Bloomberg. Kresimir Penavic, the former RenTech senior research scientist, said “he was larger than life" and "he liked to position himself as in the know and bask in the limelight.”
Khan has denied the allegations and blamed “cash-flow issues” from clients that hadn’t paid him. “To call that a Ponzi scheme, that would suggest that no dinners were done, that’s absurd,” Khan added.
With WeWork announcing today it may cut its valuation by more than half, this is a rare slew of losses for Wall Street, who is all too used to winning.