SEC Files Complaint Alleging $37 Million Fraud by Bay Area Investment Firm

USA: SEC Files Complaint Alleging $37 Million Fraud by Bay Area Investment Firm

Key Allegations

On January 29, 2026, the U.S. Securities and Exchange Commission filed a civil complaint against Milpitas, California resident Satish Appalakutty and his entities, Lorven Funds and Lorven Advisors LLC, accusing them of defrauding at least 100 investors of a minimum of $37 million.

Scheme Mechanics

The complaint alleges that from early 2019 through March 2024 the defendants solicited investments primarily through a Hindu temple attended by Appalakutty. Investors were told their money would be used to purchase discounted shares of well‑known public companies, acquire stakes in private pre‑IPO firms, or otherwise generate returns, with promised annual rates ranging from 8 % to 62.5 %.

Alleged Misuse of Funds

According to the SEC, the purported investment opportunities never materialized. Instead, new investor capital was allegedly used to make payments to earlier investors in a manner described as “Ponzi‑like.” The complaint further states that Appalakutty misappropriated approximately $6.7 million for personal use, including about $4.4 million directed to his software startup, Vistalytics Inc.

Legal Claims and Relief Sought

The defendants are charged with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, together with Rule 10b‑5. The SEC seeks permanent conduct‑based injunctions, disgorgement of ill‑gotten gains with prejudgment interest on a joint‑and‑several basis, civil penalties, and an order barring Appalakutty from acting as or being associated with any investment adviser. Vistalytics Inc. is named as a relief defendant, with disgorgement also sought against the company.

SEC Investigation Team

The investigation was conducted by SEC staff members Hannah Cho and Ellen Chen, under the supervision of David Zhou, Rahul Kolhatkar, and Jason H. Lee of the San Francisco Regional Office. Litigation will be led by Ms. Cho and Jason M. Bussey.

Procedural Status

The complaint was filed in the U.S. District Court for the Northern District of California under case number 3:26‑cv‑00917. The court will determine the appropriate remedies and whether the defendants will be subject to the requested injunctions and penalties.

Broader Enforcement Context

This action reflects the SEC’s continued focus on combating fraudulent investment schemes that target individual investors, particularly those that promise unusually high returns without verifiable underlying assets.

This report is based on information from SEC, licensed under Public Domain (U.S. Government Work). Source: Official U.S. Government release.