US SEC files a lawsuit against Babu Ramaraj for a $31m investment fraud

The US Securities and Exchange Commission (SEC) recently filed a lawsuit against Babu Ramaraj for running a major investment fraud that ended up defrauding over 70 investors.

According to the US securities regulator, Ramaraj stole approximately $31 million from 70 people who were lured with the promise of great returns. In addition, the US Attorney’s Office for the Eastern District of Virginia is also pursuing criminal charges against Ramaraj. The charges include unlawful monetary transactions and wire fraud.

The authorities alleged that Ramaraj ran a company called DAB Inspection and Consulting Services LLC. Through the firm, he solicited and lured victims, promising 40%-60% annual investment returns.

How did the scam work?

The alleged scammer’s operation ran from February 2019 until May 2024, and during this time, he falsely told investors that he would use their funds to finance surety and performance bonds. He claimed that he is investing in large-scale, lucrative contracts that DAB was awarded in order to provide quality assurance services to local and state governments, based on the SEC’s lawsuit.

The regulator further claims that Ramaraj did nothing of the sort. Instead, he created fake contracts and financial documents to support his false claims. This was meant to keep investors from suspecting that their money was being misused, and for the most part, the misrepresentation worked.

Instead, Babu Ramaraj used the funds provided by his victims to fund his own luxurious lifestyle. The SEC says that he purchased luxury cars, expensive jewelry, as well as property. On top of that, he engaged in unprofitable options trading, while a portion of the money was used to pay off early investors and keep them from suspecting anything and raising alarm.

This is likely the reason why the scam managed to remain undetected for five years before the fraudster’s actions became known, and the authorities stepped in.

The Associate Director of Enforcement in the SEC’s Philadelphia Regional Office, Scott A. Thompson, commented on the matter, saying that Ramaraj promised unrealistic returns to his investors. He claimed that the funds came from government contracts. Meanwhile, he never had any such contracts, and instead, he used the money to fund his own lifestyle.

Thompson added that he also made Ponzi-like payments in order to further the deception. However, the authorities became aware of his activities, and they fully intend to hold him accountable, and the same is true for anyone else who exploits investors’ trust for personal gain.