A University of Georgia graduate who ran an investment fraud scheme from his fraternity house while in school has pleaded guilty to securities fraud, the U.S. attorney for the Middle District of Georgia announced Friday. 

Syed Arham Arbab, 22, of Augusta, pleaded guilty Friday to a criminal information charging him with operating a Ponzi scheme that duped 117 people, including fellow students and their families, of about $1 million, U.S. attorney Charles Peeler said. 

Arbab's attorney, David Stewart of Crowder Stewart in Augusta, couldn't be reached for comment. 

As part of his plea, Arbab admitted he used investor funds for personal purchases, including clothing, shoes, restaurant and drink tabs, strip clubs and interstate travel, prosecutors said. Arbab also admitted he gambled away more than $58,000 in funds during three trips to Las Vegas last year, according to prosecutors and the U.S. Securities and Exchange Commission, which began investigating Arbab last spring. 

Arbab also channeled funds into his personal brokerage accounts, including one where his trading losses topped $300,000 and was subsequently shut down, according to the SEC.

Arbab is scheduled to be sentenced in January. He faces a maximum of five years in prison, a $10,000 fine and possibly court-ordered restitution, prosecutors said. 

"The defendant engaged in a pattern of deceit to gain the trust of unwitting investors who gave him their hard-earned money for what they believed was a sound investment," said U.S. attorney Charlie Peeler in announcing the plea. 

While living at UGA's Phi Kappa Tau fraternity house, Arbab marketed investments in two bogus hedge funds, according to prosecutors and the U.S. Securities and Exchange Commission. 

At the time, Arbab was still an undergraduate majoring in cellular biology and genetics, according to the SEC. 

The SEC also secured a temporary restraining order freezing what funds remained in Arbab's bank accounts or those affiliated with the two funds he created—Artis Proficio Capital Investments and Artis P. Capital Management. The SEC civil case against Arbab is still pending. 

Georgia's secretary of state dissolved Artis Proficio Capital Investments, which listed Arbab as its chief investment and financial officer, last April.

Prosecutors said that Arbab fabricated account statements, misrepresented the funds' returns and lied about the number of investors and the nature of the investments. Arbab promised returns as high as 22%-56% and offered what he promoted as a risk-free guarantee for the first $15,000 invested, prosecutors said. Most investors invested less than that, believing that even if Arbab's investments proved unsound or the stock market wobbled unpredictably they would still recover their full investment.

Arbab also arranged to pay back some early investors who tried to get their money back, allegedly by tricking new investors into sending some or all of their money directly to prior investors via smartphone applications, according to the SEC.