A California man has been sentenced to seven years in federal prison for orchestrating a fraudulent investment scheme that swindled investors out of $23.1 million.
Sean Grusd formed three funds he claimed would invest in private financial technology companies.
Beginning in 2021, Grusd provided potential investors with marketing materials containing numerous falsehoods about the funds’ purported investment history and successes.
The promotional materials falsely claimed that one of Grusd’s funds had been an early investor in successful startup companies, such as Instacart, Coinbase, and Shippo.
Grusd also falsely claimed that he had graduated from a prestigious law school and that he managed the personal portfolio of the CEO of a large investment management firm.
Based on these and other false representations, over a dozen victims invested $23.1 million in Grusd’s funds.
Instead of investing the victims’ money, Grusd transferred the funds to his personal bank accounts and spent the money on a lavish lifestyle, including high-end automobiles, luxurious condos in Chicago and Montreal, and lavish travel and entertainment expenses.
Many of the victims had invested a significant portion of their life savings with Grusd.
Grusd, 32, of Los Angeles, Calif., pleaded guilty last year in federal court in Chicago to a wire fraud charge. In addition to the seven-year prison term, U.S. District Judge Sara L. Ellis ordered Grusd to pay more than $21 million in restitution to his victims on Wednesday.
Morris Pasqual, Acting United States Attorney for the Northern District of Illinois, and Douglas S. DePodesta, Special Agent-in-Charge of the Chicago Field Office of the FBI, announced the sentence.
“Defendant’s fraud was brazen and unmitigated,” Assistant U.S. Attorney Corey B. Rubenstein argued in the government’s sentencing memorandum. “It was an appalling stream of deliberate choices over almost two years targeting numerous victims and resulting in huge losses.”
