The venture capital firm Vika Ventures LLC and its CEO and co-founder, George Iakovou, are facing multiple fraud charges by both the Securities and Exchange Commission (SEC) and the US Attorney’s Office of the Department of Justice.
The SEC is charging Vika Ventures and Iakovou with fraudulently offering and selling more than $6m of securities to at least 46 individual investors in multiple states including California, Georgia, and New York.
According to the SEC’s complaint, Iakovou and Vika Ventures offered to sell investors shares of private companies that might hold an initial public offering between late 2019 and 2021. However, Iakovou and Vika Ventures did not own the shares and never acquired them. Instead of purchasing the securities, Iakovou allegedly used the investor money for himself to fund his lavish lifestyle.
“This case underscores our commitment to pursuing those that prey on investors by using fake company profiles, misleading websites, and false promises of lucrative pricing of securities.”
Carolyn M Welshhans, Associate Director, SEC
“Iakovou and Vika Ventures allegedly operated a straightforward fraud on investors by offering to sell them securities in highly sought-after pre-IPO companies without ever intending to buy any shares on behalf of the investors. Instead, Iakovou allegedly spent millions of dollars on private jets, expensive watches, and lavish travel,” said Carolyn M Welshhans, Associate Director of the SEC Enforcement Division.
Violating antifraud laws
The SEC’s complaint charges Iakovou, Vika Ventures, and the scheme’s co-founder Penelope Zbravos with violating the antifraud provisions of the federal securities laws. The regulator seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties against Iakovou and Zbravos. The complaint also seeks permanent injunctive relief and a civil penalty against Vika Ventures.
Without admitting or denying the SEC’s allegations, Zbravos has agreed to a permanent injunction from future violations. She has also agreed to pay disgorgement, prejudgment interest, and a civil penalty, as determined by the district court. The settlement is subject to the approval of the district court.
“This case underscores our commitment to pursuing those that prey on investors by using fake company profiles, misleading websites, and false promises of lucrative pricing of securities,” said Welshhans.
Parallel court charges
In a parallel action, the US Attorney’s Office for the Middle District of Georgia has also announced charges against Iakovou and Zbravos. The Attorney’s Office is charging Iakovou with one count of conspiracy to commit wire fraud, 17 counts of wire fraud and two counts of engaging in monetary transactions involving criminally derived property.
According to the US Attorney’s Office, Vika Ventures advertised that it could sell pre-IPOs for high-profile companies such as Airbnb, Palantir, Coupang, Stripe and SpaceX. In the Middle District of Georgia, the fraud on victim-investors currently amounts to more than $369,000.
If Iakovou is convicted, he faces a maximum sentence of 20 years in prison and a $250,000 fine for the wire fraud charges, and a maximum sentence of 10 years in prison and a $250,000 fine for the monetary transactions involving criminally derived property charges.
Zbravos is charged with one count of misprision of a felony. She faces a maximum sentence of four years in prison and a $250,000 fine if she’s convicted.