Kumar sold the stocks he supposedly owned in a privately-held information technology company called CSS Corp Technologies (Mauritius) Ltd. He is the owner of several now-defunct investment entities.
According to the Securities and Exchange Commission (SEC), Kumar deceived the buyers into believing that he owned the shares, orchestrated a series of secret wire transfers, and induced the stock transfer agent into recording his fraudulent sales.
"He stole the money he received from investors for his own use," SEC said in a statement on Tuesday.
As per the SEC complaint filed in federal district court in San Francisco, Kumar provided the true owners of the shares with fake updates on their investments for more than a year after he had disposed of their stock in these subsequent sales in 2011 and 2012.
The actual owners had bought the CSS stock through Kumar back in 2008.
"Kumar portrayed himself as a legitimate investment professional when he was actually double dealing stock shares and pocketing money for himself," said Jina L Choi, Director of SEC's San Francisco Regional Office.