An Indian stock broker has pleaded guilty to stealing more than USD six million from local investors by falsely claiming their funds were safely invested even though he operated a massive Ponzi scheme and used nearly half of the money for his personal use.

Sunil Sharma, 68, of California has been charged with wire fraud and faces a maximum 20 years in prison and a USD 250,000 fine. He will be sentenced by US District Judge John Houston in August. Sharma covered up massive losses by lying to investors that their investments were doing well. He would send them monthly or quarterly statements that falsely reflected that their investments were generating the promised returns.

Sharma admitted that even while reassuring investors, he diverted approximately USD 2.5 million in investor funds for his own personal use, including approximately USD 700,000 towards the down payment of a USD 2 million home and approximately USD 12,000 for a cruise in the Mediterranean and for leasing luxury cars.

In 2007, Sharma attended an "Investools" workshop that convinced him that he could make money trading stock options in a conservative manner. After attending the workshop, he set up Gold Coast Holding as a vehicle to trade options.

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Recognising that his customers would not have given him money for this venture, he lied to them that Gold Coast was an extremely safe way to earn a monthly retirement income because their money was to be part of a diversified portfolio, pooled with many other investors, used to buy bonds from emerging markets in Brazil, Russia, India, and China (BRIC) and managed by Goldman Sachs.

Although Sharma initially planned on buying BRIC bonds with half the investor funds and day trading with the other half, he never in fact purchased BRIC or any other type of bonds. Between January 2008 and November 2014, Sharma raised USD 8.36 million from 32 different clients. In order to attract new investors, Sharma paid USD 2.12 million in returns to old clients from funds generally derived from the contribution of later investors.

US Attorney Laura Duffy said Sharma's Ponzi scheme was a bit harder to detect than usual as he did not promise his investors outlandish returns. Nevertheless, she warned all investors to ensure that individuals soliciting money have appropriate licenses and audited financial statements.

FBI Special Agent in Charge Eric Birnbaum said Sharma's "short term gains have resulted in long term losses for his victims. This case serves as a reminder to ask questions and conduct your own due diligence before investing your hard earned money with any broker or investment fund."