A Harvard Business School graduate is accused of targeting his own, deceiving fellow alumni into investing in a Ponzi scheme.

New York State Attorney General Letitia James, in a court order filed this week, accuses HBS alum, Vladimir Artamonov, of swindling investors out of $3 million. James urged any investors who lost funds to file a complaint. 

James' office alleges that Artamonov used his HBS network to court investors in a Ponzi scheme that defrauded at least 29 people, many of whom were connected to HBS, of at least $2.9 million in funds.

A Ponzi scheme is a type of investment fraud involving an organizer who promises risk-free, high returns and pays investors with new backers' funds, not investment profits. These kinds of schemes don't generate returns but depend on a constant stream of new money to survive. 

The New York AG has secured a court order that effectively shuts down Artamonov's alleged scheme. Her office said it became aware of the activity after being alerted of the death of an early investor who took his own life after discovering he had lost $100,000 in funds. 

"Even after the tragedy, Artamonov continued to solicit new investors and lied to them regarding the fund's strategy and performance," James' office said.

Anyone can be duped

The case highlights that even those with prestigious backgrounds in business or finance can be duped into making unsavory investment decisions, particularly when an opportunity is presented by a trusted contact.

"Even sophisticated investors can be conned by fraudsters, especially when personal relationships and networks are used to build a false sense of trust," Attorney General James said in a statement Thursday. "Vladimir Artamonov used his alumnus status from Harvard Business School to prey on his classmates and others while seeming legitimate and dependable. Instead, he has been scamming people out of their investments, with horrific consequences. Today, we have put a stop to this scheme and encourage anyone who has been defrauded to come forward to my office." 

Artamonov graduated from HBS in 2003 with a master's degree in business administration and later moved to New York where he worked as a securities professional. He called his investment fund "Project Information Arbitrage" or the "Artamonov Fund." 

In courting potential investors, he claimed to have advance knowledge of Berkshire Hathaway's investment decisions by way of public state insurance filings. He likened his insights to "having a private time machine" or "getting tomorrow's newspaper today," projecting fund returns of 500% to 1,000%, according to the AG.

"In reality, Artamonov used his investors' money to buy short-term options that expired within days of purchase and appeared to have no relation to Berkshire Hathaway or its investment activities," the AG's office said, adding that Artamonov funded a cushy lifestyle for himself using investors' money.

James' court order requires Artamonov to testify and produce books and records to guide an ongoing investigation.

Harvard Business school declined to comment on the matter when reached by CBS MoneyWatch. 

Megan Cerullo

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News Streaming to discuss her reporting.