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PostPosted: Sun May 25, 2014 10:09 pm 
NOTE: This is an excerpt of the Securities and Exchanges Commission prosecution of Khalsa Financial Services, Inc. The entire documents can be found here and here.

In its Complaint, the Commission alleges that from January 1988 to the present, Khalsa, through Gurujot and [*2] Darshan, engaged in a scheme to defraud nine advisory clients of approximately $ 481,000 that was placed with Khalsa for investment. Both Gurujot and Darshan are part of the American Sikh community and the majority of Khalsa's clients are part of the Sikh community.

In approximately January 1988, Gurujot and Darshan caused Khalsa to open a money market account in Khalsa's name at a bank in Virginia. Khalsa characterized this account in its books and records as a "Time Deposit Account" (TDA) and used the TDA as a general operating account in which client funds were pooled. The Complaint alleges that Khalsa informed its advisory clients through quarterly investment statements that their funds placed into the TDA were investments in "Time Deposits" when, in fact, the supposed "Time Deposits" were never invested in certificates of deposit, treasury bills or notes, or any type of term investment. Rather, Gurujot and Darshan took these funds out of the TDA, treated the funds as loans to Khalsa, and used them to make loans to affiliated entities; to repay funds previously borrowed from affiliated entities; to pay the operating expenses of affiliated limited partnerships; and to return [*3] principal and make interest payments to certain clients. The Complaint further alleges that the defendants failed to disclose these actions to Khalsa's clients. Moreover, Khalsa never disclosed the use of client funds, as required by its investment advisory agreement.

The Commission further alleges that the defendants failed to safeguard funds of Khalsa's advisory clients in its custody; failed to make and keep true, accurate and current certain books and records relating to Khalsa's investment advisory business; and failed to make and disseminate certain reports relating to Khalsa's investment advisory business.

PostPosted: Wed Jun 04, 2014 5:12 pm 
seems this whole scam i read about a couple years back somewhere. new to me was good ol' gurujot was screwing his fellow 3hoers...but then again he was following in the bogi yogi scheme of things...'father like son'...the tradition goes on FRAUD. with the harijawan gemstone scam..sec does no criminal prosecutions they leave it up to the individual states.
there is no mention of restitution to the investors unless i missed it

PostPosted: Fri Jun 20, 2014 6:27 pm 
The second of the documents posted here, the SEC FINDINGS AND SANCTIONS recorded September 24, 1994, contains this important piece of information. It concerns the plea deal Gurujot Singh and Al Ellis made to escape further punishment in the dope smuggling case. The tactic they deployed is called an Alford Plea:

G. From January 1988 to the present, Khalsa, Gurujot and Darshan willfully violated Section 204 of the Advisers Act and Rule 204-1(b)(1) thereunder. Respondents failed to promptly file an amendment to Khalsa’s Form ADV to correct information contained therein which had become materially inaccurate. In this regard, the filing inaccurately stated that, in the prior ten years, no advisory affiliate had been convicted of or pled guilty to any felony. However, in April 1991, Gurujot entered an Alford plea of guilty to a conspiracy to import 22 tons of marijuana into the United States, and received a three-year suspended sentence.

PostPosted: Fri Jun 20, 2014 6:35 pm 
From the Los Angeles Times article following Yogi Bhajan's death, "A Yogi's Requim" dated Oct. 23, 2004:

"Guru Jot Singh Khalsa, who managed Bhajan's Virginia ashram, and Guru Jot's son-in-law Albert Ellis, were convicted for importing tons of marijuana into the U.S. from Thailand during the 1980s. Guru Jot entered an Alford plea, which meant he admitted no guilt, but acknowledged the prosecution could likely prove its case."

Note: Albert Ellis is mistakenly identified as Gurujot's son-in-law. Al Ellis' oldest son, Akasha, was married to Gurujot Singh and Kaur's daughter, Kiran Kaur.

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