Neal Goyal of Blue Horizon Asset Management Charged with Allegedly Defrauding 41 Investors of $11.3 Million

A Chicago investment fund manager fraudulently obtained more than $11.3 million from 41 investors and misused the funds for his own benefit, as well as to repay certain investors in a Ponzi-type scheme, according to a criminal fraud case announced by federal law enforcement officials. The defendant, Neal Goyal, was the founder and sole managing member of Blue Horizon Asset Management LLC and Caldera Advisors LLC, both of which were unregistered investment advisers.

Goyal, 33, of Chicago, was charged with one count of wire fraud in a criminal information filed in U.S. District Court, where he will be ordered to appear for arraignment on a date yet to be determined.

The U.S. Securities and Exchange Commission filed a parallel civil fraud lawsuit yesterday and obtained a court order freezing the assets of Goyal and his funds. The SEC suit alleges that Goyal stole his investors’ money to fund his own lavish lifestyle, to pay business expenses, and to support a variety of personal business ventures, including a bar and two children’s clothing boutiques that his wife operates in Chicago.

According to the criminal case, between June 2006 and May 2014, Goyal obtained more than $11.3 million from investors through offering and selling limited partnerships in three Blue Horizon funds and a Caldera Equity Fund by making false representations about the intended use of the funds, the investment returns generated, and the source of the investment returns and principal paid to investors. In fact, Goyal allegedly misappropriated the investors’ funds for his own benefit and concealed the fraud scheme by creating and distributing false account statements.

Beginning in early 2006, Goyal represented that funds invested in the Blue Horizon funds would be used for long and short trading in equities, options, and other securities. By June 2006, Goyal began sending false account statements to investors that inflated the financial results from trading purportedly being done by those funds, the charging document alleges. By the first half of 2008, Goyal allegedly knew that he intended to misuse the funds for himself and to make Ponzi-type payments to certain investors. By January 2009, Goyal had stopped trading for two Blue Horizon funds and had not traded at all for the third Blue Horizon fund. In February 2009, Goyal allegedly began engaging in a similar fraud scheme with investments in the Caldera Equity Fund.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine or an alternate fine totaling twice the loss or twice the gain, whichever is greater, and restitution is mandatory. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.