LOS ANGELES: A Canadian national pleaded guilty on Monday to five wire fraud charges for defrauding investors in a $5 million Ponzi scheme in which he pretended to be a successful beverage entrepreneur with close ties to well-known business executives and NBA stars such as Stephen Curry and Shaquille O’Neal.
Khemraj Dave Hardat, 50, a former resident of the Ritz-Carlton Residences at L.A. Live in downtown Los Angeles, entered his plea before United States District Judge Dale S. Fischer, who scheduled an August 12 sentencing hearing. As a result of Monday’s guilty pleas, Hardat faces a statutory maximum sentence of 100 years in prison.
In a plea agreement filed in United States District Court, Hardat admitted that, from August 2014 through November 2018, he falsely held himself out as a successful investor and businessman in the performance beverage and water-bottling industries. Hardat duped his investors by falsely representing that he had advanced educational degrees – including a Ph.D. – and that he maintained relationships with established business figures such as computer entrepreneur Michael Dell and the chief executive officer of PepsiCo.
Hardat also falsely represented that Basketball Hall of Famer Shaquille O’Neal was one of his business partners, and that professional basketball star Stephen Curry would be endorsing one of his company’s products, according to court documents. Furthermore, Hardat falsely claimed that PepsiCo and Dr. Pepper Snapple Group, Inc. owed him more than $100 million as the result of purported business deals he consummated with them, the plea agreement states.
Hardat supported his bogus claims of financial success by showing victims doctored digital images of bank account statements showing balances inflated far beyond any amount Hardat actually had at these financial institutions. One doctored image emailed to a victim purportedly showed a balance of nearly $500 million in one bank account, while another phony image purported to show a bank account balance of nearly $170 million, court papers state.
In reality, Hardat never intended to use his investors’ proceeds for the business purposes that he represented, the plea agreement states. Instead he used the funds to pay off his personal debts, purchase luxury cars worth more than $100,000 each, pay rent at the Ritz-Carlton Residences, pay tuition for exclusive private schools for his children, and purchase luxury boxes and tickets for sporting and entertainment events, according to the plea agreement. Hardat also admitted that, in the style of a Ponzi scheme, he made payments to prior victim-investors out of subsequent victim-investors’ money.
During the course of the scheme, Hardat took in more than $5 million from investors, who have suffered losses of more than $4 million.
This matter was investigated by the Federal Bureau of Investigation.