Opinion ID: 200195
Heading Depth: 2
Heading Rank: 5

Heading: Khan's Involvement

Text: 17 Khan engages in project financing and project development work. As Fife's partner at Seaview, Khan engaged in various tasks on behalf of the entity. Khan wrote a letter to Herula describing the investment program regarding the leveraging of monies. Once leveraged through balance sheet enhancement, the money would be used towards project finance. Khan signed several letters directed to potential investors in the balance sheet enhancement program. The SEC claims that these letters were intentionally aimed to mislead potential investors. There is no proof that these letters were mailed; however, a similar proposal was mailed to Al Bloushi, one of Brite's investors. 18 In December 2001, Khan sent letters to Al Bloushi and his representative in an attempt to convince Al Bloushi to invest additional funds in the amount of $100 million dollars in a private placement project finance program. One letter promised that Al Bloushi would receive a guaranteed return of 7% per year, without any risk. In addition, Al Bloushi would receive a reward for holding the investment for a year and a day. This reward included a 20% return on the 30th day of the trading cycle and an 80% return on the investment that was to be paid in four installments of 20% each. 19 In the SEC investigation, Khan testified that he told Al Bloushi's representative that if an investment were made, he was guaranteed a return. This representation was material since project finance is very risky. If a project finance investment fails, then the investor receives nothing. Khan testified that [t]he risks are high, the rewards are high. There's a risk/reward relationship on every, every transaction. There's tremendous amount of risks involved: there's tremendous amount of rewards to be made. The investor has to be a sophisticated investor. Although Khan testified that he informs investors of the risks of project finance, these risks were not included in the project proposal sent to Al Bloushi.