This story is the third chapter in what seems to be a nightmare for many diamond investors around the world, but especially in the small Canadian market of Toronto, where the incidents have been taking place. It is astonishing that that scheme has been ongoing for so long and no authorities have moved to shut down this operation.
Diamond Investment Crime: History Repeats Itself
The story began back in 2016 when I published an article regarding Precious Investments Inc. and its attempt to defraud investors of millions of dollars. Precious Investments attempted to launch a digital currency backed by physical diamonds that they named BitGems, although that attempt ultimately failed. Precious Investments was the third incarnation of that company’s name, and came complete with a ticker symbol PNIK that was traded on OTC pink sheets. It is not surprising that the ridiculous scheme went belly up, but what is not surprising is that founder Kashif Khan did not stop there!
A snapshot of the PNIK share price activity as of 29 June 2017 (2 years after the BitGems scheme was disbanded!)
See how they are a delinquent in SEC Reporting Image credit: OTC Markets
A Snapshot of the PNIK share price performance since we exposed them first back in early 2016 Image Credit: OTC Markets
A year later, that $5 million fraud failure, was followed by an even bigger fraud attempt of 20 times the size, at over $100 million. Precious Investments announced that it was acquiring a unique portfolio of diamonds, in exchange for hundreds of millions of shares – even though the whole company was worth a fraction of the value. This second case of fraud for Kashif Khan was also upended spectacularly.
In between the first and second fraud incidents, we even had an encounter with an accountant seeking assistance as he was claiming that his client invested in the first fraud. We suggested the proper authorities be contacted and we sincerely hope that it ended well.
Current and Third Fraud attempt
Just a few short months after the second fraud case, Kashif Khan is at it again, and he even seems to be learning from his previous attempts. This time he is dressing his operation as a legitimate Asset management company that advises investors on acquiring fancy color diamonds.
The Article’s first sentence already laughable tells us how clueless Kashif Khan is about diamond investments and also has a major ‘flaw’: “Flawless Management is the first and only fund trust of its kind in Canada, allowing Canadians to invest in rare colored diamonds….”. In my opinion when making such a strong claim such as this one, proper research must be done in order to back it up. Did Khan not know that Valhalla Diamond trust fund has existed since 2014? A full 3 years earlier? Pretty convenient to leave that out just to make a point.
When I reviewed the Flawless Management website, I continued to see flaws (not so flawless after all!). Firstly, the company was 75% owned by Precious Investments, who is run by none other than Khan himself, meaning that he sold a majority stake in one of his companies to another company he runs (but no longer runs since he quit his position, which is mentioned in my second article). This creates a major conflict of interest. Secondly, Khan is currently the CEO of Flawless while the president is an individual who is a doctor with some real estate investment experience. What is wrong with this picture? (Hint: what does either of them know about fancy color diamond investments?)
I am further investigating who is promoting this financial product to the mass market, and who approved it. From extensive searching, I can see that nobody in the securities office of the SEC or the Ontario Securities Commission did any basic research on PNIK. Can somebody please forward this article to anybody at those offices? I can fill you in.
It can be hard to swallow that even in a year as advanced as 2017, such a ridiculous criminal is still freely duping innocent investors. However, to end this story on a good note – there are 2, if not more, pending law suits against Khan and his companies for fraud, on both sides of the Canadian/US border. Perhaps with increased exposure the SEC or the Ontario Securities Commission will wake up long enough to shut this racket down! How many more strikes does this man need?!
Got any questions or concerns about diamond fraud? Ask in the comments!
- Precious Investments Inc. (PNIK) Amplifies Its Fraud Against Investors And The Diamond Industry as a Whole
- Investors Beware – The Silent Majority Does Not Count!
- What Is All the Fuss About the Rapaport Investment Diamonds Report (IDR)?
- Fancy Color Diamonds Can Rescue European Asset Managers And Their Equity Funds
- Christie’s New York Auction Ends The First Half Season Of Major Auctions