British Citizen Sentenced To Four Years In Prison For His Role In Fraudulent Investment Scheme Related To Co-Working Business
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that SAVRAJ GATA-AURA (“GATA-AURA”) was sentenced yesterday to four years in prison for participating in a scheme to defraud more than 800 investors of more than $40 million by making false and fraudulent representations about, among other things, the management, profitability, and operations of a co-working space company called Bar Works Inc. and related entities (“Bar Works”). GATA-AURA previously pled guilty to conspiracy to commit wire fraud before United States District Judge Jed S. Rakoff, who also imposed the sentence.
Acting U.S. Attorney Audrey Strauss said: “For more than a year-and-a-half, Savraj Gata-Aura lured hundreds of victims to invest approximately $40 million into a massive Ponzi scheme. He concealed from investors that Bar Works was run by Renwick Haddow, who has pled guilty for his role in this and another fraud scheme, instead listing the fictional CEO ‘Jonathan Black’ in offering documents. By the time the scheme collapsed, Gata-Aura had personally made close to $3 million from unsuspecting investors.”
According to the allegations contained in the Superseding Indictment filed against SAVRAJ GATA-AURA and statements made in related court filings and proceedings, including the trial of co-defendant James Moore:
From approximately September 2015 to June 2017, GATA-AURA partnered with Renwick Haddow, who is also a British citizen, in soliciting investments into Bar Works through material misrepresentations concerning, among other things, the identity of Bar Works’ management and the financial condition of that company. Previously, Haddow had been disqualified as a director of any U.K. company for eight years, and sued by the Financial Conduct Authority, a British regulator, for operating investment schemes through misrepresentations that lost investors substantially all of their money. These sanctions and lawsuit were publicized extensively online.
In order to conceal his role at Bar Works because of the negative publicity on the internet related to past investment schemes and government sanctions in the United Kingdom, Haddow adopted the alias “Jonathan Black.” Notwithstanding Haddow’s control over Bar Works, GATA-AURA and others knowingly distributed the Bar Works offering materials listing Black as the chief executive officer of Bar Works and claiming that Black had an extensive background in finance and past success with start-up companies. As GATA-AURA well knew, “Jonathan Black,” was an entirely fictitious person, created to mask Haddow’s control of Bar Works.
Among other things, GATA-AURA helped devise and distribute pitch materials that contained the misrepresentation, coordinated a substantial sales force to recruit investors knowing that the materials contained the falsehood, advised Haddow as to how to continue to conceal the truth concerning the identity of “Jonathan Black,” and affirmatively represented to sub-agents for investors that he was communicating with CEO “Jonathan Black.” GATA-AURA and his agent network were directly responsible for raising approximately $40 million from investors in Bar Works. GATA-AURA received in excess of $2.9 million in commissions out of victim funds for his participation in the scheme.
In sentencing GATA-AURA, Judge Rakoff remarked that the defendant “lied, cheated, and as a result many victims were left destitute or deprived of money that was important to them. . . . His primary motivation was greed.”
In addition to the prison term, GATA-AURA, 33, was sentenced to three years of supervised release. GATA-AURA was also ordered to pay forfeiture of $2,988,225. The Court will also enter a restitution order at a later date.
Renwick Haddow, 51, pled guilty on May 23, 2019, to one count each of wire fraud and wire fraud conspiracy relating to the Bar Works scheme, and one count each of wire fraud and wire fraud conspiracy relating to a separate investment scheme involving Bitcoins. Haddow’s sentencing is scheduled for October 23, 2020.
James Moore, 58, was convicted of one count of wire fraud and one count of wire fraud conspiracy for his participation in the scheme on June 7, 2019, following a week-long jury trial before Judge Richard M. Berman. Moore’s sentencing date is pending.
Ms. Strauss praised the investigative work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission, which has separately brought civil actions against GATA-AURA, Haddow, and Moore, for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Vladislav Vainberg and Martin S. Bell are in charge of the prosecution.