Babu Ramaraj Allegedly Defrauds Investors of $31 Million

Babu Ramara, an Aldie, Virginia, resident, has been accused of orchestrating a fraudulent scheme through his company, DAB Inspection and Consulting Services LLC. The scheme deceived more than 70 investors and misappropriated approximately $31 million.

According to the document, RAMARAJ claimed that his company DAB (Design and Build) obtained a contract with “The Boring Company,” which is described as “an infrastructure, tunnel construction company founded by Elon Musk.” Specifically:

1. In or around September 2021, RAMARAJ told INDIVIDUAL A that DAB had obtained a contract with The Boring Company.
2. RAMARAJ used this alleged contract as a pretext to borrow $40,000 from INDIVIDUAL A, claiming he needed the money to cover the bond associated with the contract.
3. RAMARAJ promised to pay INDIVIDUAL A $16,000 in interest and return the principal after about a month and a half.

It’s important to note that this claim about working with The Boring Company, like many of RAMARAJ’s other claims about contracts and business relationships, appears to have been fraudulent. The document does not provide any evidence that DAB actually had a contract with The Boring Company or any other Elon Musk-affiliated entity.

RAMARAJ also claimed to have contracts with other major entities, including:

1. “DC Water”
2. Virginia Department of Transportation
3. The city of Alexandria, Virginia
4. Federal Aviation Administration (FAA)

However, the investigation revealed that many of these claimed contracts were fabricated, with RAMARAJ producing falsified documents to support his claims.

The FBI has concluded there is probable cause to arrest Babu Ramaraj for wire fraud, money laundering, and aggravated identity theft. Special Agent Michael Major submitted this conclusion after investigating Ramaraj’s alleged financial crimes.

U.S. Magistrate Judge William B. Porter attested to the document authorizing an arrest warrant on May 28, 2024. The charges stem from violations of Title 18 U.S. Code Sections 1343, 1957, and 1028A(a)(1).

According to the SEC’s complaint, from February 2019 to May 2024, Ramaraj enticed investors with promises of 40-60% annual returns. He allegedly claimed these returns would come from financing surety and performance bonds for large-scale government contracts awarded to DAB for quality assurance services. To support his claims, Ramaraj reportedly fabricated contracts and financial documents.

Ramaraj is said to have fabricated contracts and financial documentation to support his false claims. However, the SEC asserts that these contracts were entirely fictitious. Ramaraj instead utilized investor funds for personal gain, including acquiring luxury vehicles, jewelry, and property, engaging in unprofitable options trading, and compensating earlier investors.

The SEC’s complaint, filed in the United States District Court for the Eastern District of Virginia, charges Ramaraj with violating various securities laws and seeks an injunction, disgorgement, penalties, and a bar on serving as an officer or director.

Concurrently, in June 2024, the U.S. Attorney’s Office for the Eastern District of Virginia announced separate criminal charges against Ramaraj for wire fraud and unlawful monetary transactions, which are currently pending.

Investment fraud remains a significant issue in the United States, with annual losses estimated between $10-40 billion. According to a 2021 FINRA Investor Education Foundation study, approximately 1 in 10 Americans fall victim to financial fraud in their lifetime, with a median loss of around $18,000 per victim, as the Federal Trade Commission reported. Ponzi schemes, similar to the one alleged in the Ramaraj case, account for approximately 15-20% of all investment fraud cases.

The SEC’s investigation was conducted by a team from the Philadelphia Regional Office, supervised by senior officials. Karen M. Klotz and Judson Mihok will lead the SEC’s litigation, which Gregory R. Bockin will supervise.

The SEC acknowledges the assistance provided by the U.S. Attorney’s Office for the Eastern District of Virginia, the FBI, and the Virginia State Corporation Commission.

While fraud affects all age groups, older adults often suffer the highest median losses. Notably, only about 1 in 4 fraud victims report the crime to authorities, and less than 10% fully recover their losses.

In fiscal year 2023, the SEC brought 784 enforcement actions and obtained orders for nearly $5 billion in financial remedies, highlighting the ongoing efforts to combat such fraudulent activities.