Joe Raedle/Getty Images

A cellular biology and genetics undergraduate student at the University of Georgia ran a $1 million Ponzi scheme out of his fraternity house, tricking 117 people into investing in his fake hedge funds and then spending their cash on alcohol, gambling, and strip clubs.

Syed Arham Arbab, a 22-year-old from Augusta, pleaded guilty on Friday in U.S. District Court in the Middle District of Georgia to securities fraud.

Arbab confessed that from May 2018 to his graduation in May 2019, he lied to dozens of investors, including fellow students, in order to get them to partake in his purported “hedge funds,” which he called Artis Proficio Capital Management and Artis Proficio Capital Investments, according to a press release from the Department of Justice.

Ex-Prof Used Federal Grant Money on Strip Clubs. Now Drexel University Has to Pay the $190,000 Bill.

Arbab said he raised $1 million by fabricating account statements, the nature of the investments, and the total number of funds invested. He also promised risk-free “guarantees” on rates of returns up to 22 percent or 56 percent, according to federal prosecutors.

“Arbab admitted that knew he did not have the liquid capital to make good on these guarantees when he made them, but he did not disclose this to his investors,” the DOJ press release states.

Arbab also confessed to the court that he told investors he was getting his MBA at the school’s Terry College of Business and that a famous NFL player and UGA alum had put money into the fund. In reality, Arbab was rejected from UGA’s MBA program, and the football player had never invested in his fund.

He ultimately spent the money he’d bilked from investors on clothing, shoes, fine dining, alcohol, strip clubs, and three gambling trips to Las Vegas, prosecutors said.

Many of the allegations that Arbab admitted on Friday were first mentioned in a Securities and Exchange Commission complaint filed by the department in May. The agency assisted the FBI in its investigation, according to the press release.

Story continues

He is set to be sentenced in January 2020.

Read more at The Daily Beast.

Got a tip? Send it to The Daily Beast here

Get our top stories in your inbox every day. Sign up now!

Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.