May 18, 2004

In 2003, as speculation grew that the internet search engine company would go public, Shamoon Rafiq began meeting investors in New York and telling them he was a venture capitalist and a college friend of Google's founders, prosecutors said.

A Dutchman who pleaded guilty to swindling wealthy New Yorkers by promising an inside track to Google stock and then blowing $350,000 (£198,000) of their money in a three-month spending spree on hotels, restaurants and gambling, could face more than five years in prison, it emerged today.

Mr Rafiq, who was working as a business development manager for British Telecom in the city, offered the lure of "preferred stock", available to the founders' friends and families at the pre-flotation price of $12 a share.

At least five investors, including a lawyer for a European telecommunications company, an investment banker, a senior brokerage executive and the chairman of a global telecommunications firm, wired $500,000 to his bank accounts.

Mr Rafiq could be sentenced to more than five years in prison for wire fraud under the terms of his agreement with prosecutors. The sentence would be two years less than he might have faced had he lost at trial.

Prosecutors are opposing Mr Rafiq's request to serve his sentence in the Netherlands under the terms of an international treaty governing Dutch citizens convicted in the US.

The scam began to unravel when the investment banker became suspicious and demanded his money back. The FBI arrested Mr Rafiq in New York in March.

Authorities said Mr Rafiq had spent the funds on a lavish lifestyle, including New York nightclubs, strippers, $100 tips for restaurant and hotel employees, and expensive watches for his friends.

Google filed its long-awaited plans for an initial public offering last month, aiming to raise $2.7bn with an offering that is expected to give it a market value of at least $20bn.

Source: Guardian.co.uk

        

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