The U.S. Securities and Exchange Commission charged a recent University of Georgia graduate with running a fraud scheme from his fraternity house.

Syed Arham Arbab, 22, allegedly used a Ponzi scheme to bilk at least eight college students, recent graduates and their family members out of $269,000 by offering investments in a purported hedge fund, according to the complaint filed on Friday, May 31. A Ponzi scheme, most famously used by Bernie Madoff, is a type of investment fraud that uses funds collected from new clients to pay existing investors.

The regulator claims Arbab started the scheme in May 2018 and listed the address of his fund as 558 W. Broad Street, Athens, GA 30601, which is the home of the Phi Kappa Tau fraternity house at the University of Georgia in Athens.

"We allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students," Richard R. Best, regional director of the SEC's Atlanta Office, said in a statement.

To gain investors for his "Artis Proficio Capital" investment fund, the SEC says Arbab claimed he generated returns of up to 56% and guaranteed investments up to $15,000. But no such fund existed says the SEC's complaint. Instead, Arbab deposited investor funds into his personal bank and brokerage accounts, and the regulator says he used the funds for expenses such as Uber rides, purchases at bars and a strip club, as well as a gambling trip to Las Vegas.

He also used some of the investor funds to pay back earlier investors who had requested their money back, the complaint says. At Arbab's direction, some new investors even "unwittingly" sent their deposits to existing investors via apps such as Venmo, Zelle and Cash App, reports the SEC. To cover his tracks, Arbab allegedly claimed the existing investors were involved in managing the fund.

While Arbab claimed he was a graduate student at the University of Georgia, pursuing his MBA, the SEC's complaint says he only recently graduated with his bachelor's in cellular biology and genetics in May 2019.

Arbab and the fraternity did not immediately respond to CNBC Make It's requests for comment on Tuesday.

"This is a reminder that investors of all ages and experience levels — whether long-time investors or recent graduates investing funds from their first few paychecks — should carefully research investment opportunities and the people offering them," Best added.