A California man falsely claimed to be an MIT-trained physicist who worked on secret government projects to raise $26 million for supposed battery technology and cancer-research startups, the SEC said in a fraud lawsuit.
(Bloomberg) — A California man falsely claimed to be an MIT-trained physicist who worked on secret government projects to raise $26 million for supposed battery technology and cancer-research startups, the SEC said in a fraud lawsuit.
Faiz M. Chowdhury, 54, actually spent most of the money on gambling, luxury travel and paying off investors who complained, the Securities and Exchange Commission said in a suit filed Tuesday in federal court in Los Angeles. According to the regulator, Chowdhury put only about $6.6 million of the money he raised into his companies — DTI Holdings Inc. and Quantum Age Corp.
Chowdhury allegedly claimed that he was ushering in “the next age of humanity” with companies that had developed both faster-charging batteries using graphene technology and a cancer cure. To buttress his claims, he told investors he had doctorates in physics from the Massachusetts Institute of Technology and Johns Hopkins University and had also been a fellow at Harvard University, the SEC said.
According to the suit, Chowdhury also fabricated an extensive resume of government work. He allegedly claimed he was a scientific adviser to President George W. Bush and Senator John McCain and that he had conducted breakthrough research at the National Aeronautics and Space Administration and Oak Ridge National Laboratory.
Chowdhury couldn’t be reached for comment, and calls to Quantum were not answered.
The SEC is seeking to bar Chowdhury from issuing, offering or selling any securities and to disgorge all the money he illegally obtained, plus pay unspecified civil penalties.
He allegedly claimed that his work for the government was the basis for his startups.
“Chowdhury falsely told investors that he was the original inventor of graphene, but because of the secrecy of his government work, he could not be named on any patent or given credit in any public sphere,” the SEC said.
Graphene is a light and flexible carbon material that is stronger than steel and conducts electricity better than copper. It has been touted as a potential replacement for the current lithium-ion batteries that power everything from smartphones to electric vehicles, but several hurdles remain to graphene’s widespread adoption.
In pitching his cancer cure, Chowdhury used more emotional appeals, according to the suit.
“In one instance, aware that the mother-in-law of one investor had recently died from cancer and that the issue was emotional for him, Chowdhury went so far as to hold up a vile filled with a black liquid and falsely told the audience it contained a ‘cure for cancer,’” the SEC said.
The case is Securities and Exchange Commission v. Chowdhury, 23-cv-01741, US District Court, Central District of California (Los Angeles).
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