A New Jersey broker faces grand larceny and securities fraud charges in New York for allegedly losing in unauthorized trades about $1 million invested by a professional couple from Scarsdale in the broker”™s newly created hedge fund.
New York Attorney General Eric T. Schneiderman on Monday announced the indictment of  Khawaja Saud Masud, 37, of Jersey City, on charges of first-degree grand larceny and securities fraud under the Martin Act. He faces up to 25 years in prison if convicted of the felony charges, according to the attorney general”™s office.
Prosecutors alleged that Masud in 2012 solicited 75-year-old Dr. Kalim Irfani and his wife, Rehana Irfani, to invest their retirement monies in the broker”™s purported hedge fund, RKS Capital LP, which Masud had created two weeks earlier. Online sites show that Kalim Irfani has a practice at Riverside Pediatrics in Yonkers and his wife is a real estate agent at Silversons Realty LLC in Scarsdale, though the attorney general”™s office described the couple as retired.
Given Masud”™s promises of a secure investment opportunity that was far safer than investing in a mutual fund, the Irfanis allegedly gave more than $1 million to Masud. Prosecutors alleged the broker also promised to use a conservative strategy that would preserve their $1 million investment while earning a high rate of return and to have a third party administrator send the couple monthly reports on their investment.
Prosecutors at Masud”™s Monday arraignment claimed the broker instead engaged in highly speculative and aggressive trading with the Irfanis”™ money. To conceal his unauthorized activity, he allegedly canceled the services of the third-party investment monitor only one day after his first trade and continued to rack up large losses in multiple daily stock trades.
Masud allegedly lost almost $1 million of the couple’s investment in less than three months.
Prosecutors claimed Masud dodged the Scarsdale couple”™s repeated inquiries about the status of their investment for almost a year before admitting to the amount lost.
Masud was arraigned on the charges in the indictment before Westchester County Court Judge Anne E. Minihan. Bail was set at $500,000 bond or $250,000 cash, according to Schneiderman”™s office.
