Advisor admits to running 13-year Ponzi scheme, defrauding 53 clients

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An investment advisor’s 13-year Ponzi scheme reached its end on Oct. 16 when Edward Lee Moody Jr. pleaded guilty to mail fraud and engaging in monetary transactions in criminally derived property, according to the U.S. Department of Justice.

Moody, who owned an RIA known as CM Capital Management, collected $6.1 million from 53 investors, through April 2005 to June 2018, under the premise that he would profitably invest that money in securities on their behalf and manage those accounts on an ongoing basis.
The 47-year-old investment advisor, however, did nothing of the kind. In most instances, Moody did not manage his investors’ accounts, buy or sell securities on their behalf, or even open individual brokerage accounts for them, according to his criminal court records filed with the U.S. District Court for the Eastern District of Virginia.

Instead, Moody funneled his clients’ funds into his own pockets, using at least $1.4 million of the stolen money to cover business expenses, purchase a home, make car loan payments, shop, and travel to Las Vegas and other destinations. Another $885,000 went to buying and selling securities for his personal benefit.

To keep his scheme afloat, Moody spent $1.5 million he received from new investors on periodic payments to earlier investors to give the impression that their investments were profitable. He also created fraudulent monthly account statements for clients showing that their money had been invested in securities and was earning favorable returns.

At least 13 of the individuals he defrauded were elderly investors who liquidated assets from existing, legitimate retirement accounts in order to provide Moody with funds to invest for their benefit. Before the SEC shut down the scheme this summer, Moody had managed to con more than $1.1 million from clients in 2018 alone.

Moody and his lawyer, Laura Pellatiro Tayman, declined to comment on the case.

Moody began CM Capital in June 1999. Before that, he worked for two registered broker-dealers, according to the SEC’s complaint.

Moody will be sentenced on Feb. 5 of next year and could face up to 20 years in prison for the mail fraud charge and 10 years for engaging in monetary transactions in criminally derived property.

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Securities fraud Financial crimes SEC enforcement Embezzling RIAs DoJ SEC