Federal prosecutors charged the founder of an investment and real estate firm with defrauding a state university out of more than $8 million by persuading it to invest in collateralized mortgage obligations.
Manhattan U.S. Attorney Preet Bharara today announced the unsealing of a felony complaint against Seth Beoku-Betts, founder of Betts & Gambles LLC, for defrauding a Midwestern state university in 2008. The school isn’t identified by name in court papers.
Beoku-Betts approached a former director of investments for the school in 2008, claiming to be the principal of Betts & Gambles Global Equities LLC, and solicited the university’s investment in collateralized mortgage obligations, prosecutors said in a complaint. The university agreed to invest $8.17 million, wiring the funds to a trust account maintained by an attorney for Betts & Gambles, the U.S. alleged.
After growing concerned about its investment, the university director had numerous conversations and e-mail exchanges with Beoku-Betts, demanding the return of the money, the U.S. said. Beoku-Betts never returned the funds, instead spending “millions of dollars of the university’s investment on his own personal expenses, including the purchase of luxury cars and real estate,” prosecutors alleged in the complaint.
Beoku-Betts was arrested this morning by federal authorities in North Carolina, the U.S. said. A voice-mail message left at his office in North Carolina wasn’t immediately returned.
The Betts & Gambles website says the company combines both real estate development and investment opportunities that include waterfront properties in North Carolina and a condominium hotel in the Dominican Republic.
The case is U.S. v. Betts, 13-mj-01523, U.S. District Court, Southern District of New York (Manhattan).
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