By Robert Haugh
The Securities and Exchange Commission (SEC) has charged SiliconSage Builders with defrauding investors. Hundreds of investors may have lost $119 million in a Ponzi scheme.
SiliconSage owner Sanjeev Acharya allegedly raised money from new investors to pay old investors. According to the SEC, he did this because for the last four years only one of the developer’s projects has been profitable.
“As we allege in our complaint, wrongdoers sometimes prey on the trust of members of their communities to raise funds for their fraudulent schemes,” said Alka Patel, Associate Regional Director of the SEC’s Los Angeles Regional Office in a press release. “Affinity frauds are particularly harmful to retail investors, and this case demonstrates the SEC’s commitment to pursuing such schemes and protecting retail investors.”
Santa Clara Controversy
SiliconSage was in the middle of major controversy in Santa Clara last year.
A SiliconSage executive Harbir Bhatia unsuccessfully ran for City Council. She lost to Kathy Watanabe in District 1.
During the campaign, residents complained that Bhatia acted as a lobbyist but failed to register as required.
Bhatia and SiliconSage are the subjects of a City investigation in their lobbying activities.
Labor officials have also accused SiliconSage of worker wage theft. They mailed out brochures letting Santa Clara voters know of the accusations and Bhatia’s role in the company.
Bhatia also was President of the Santa Clara Library Foundation in 2019. It was believed Bhatia solicited the lead contribution to the Foundation’s fundraising dinner and auction from SiliconSage. But in an email Bhatia denied it.
“I was an employee of the company and nothing to do with fundraising for investor relations. I focussed [sic] on community benefit. I made recommendations on projects and initiatives that could benefit the community.”
But according to sources, SiliconSage has not paid the Library Foundation.
Bhatia did not respond if she would help fulfill the financial commitment to the Library Foundation.
According to the Mercury News, the developer also stiffed other nonprofits like San Jose Jazz and SPUR.
The SEC’s complaint is filed in the U.S. District Court for the Northern District of California according to their press release. They seek preliminary and permanent injunctions, the appointment of a receiver over SiliconSage, asset freezes, disgorgement with prejudgment interest, and financial penalties against the defendants, as well as an order prohibiting the destruction of documents.