SEC accuses advisor of $5M Ponzi scheme
The SEC has charged an advisor and his wholly-owned RIA firm with operating a nearly $5-million Ponzi scheme that defrauded scores of investors over almost a decade, according to the regulator’s complaint filed in federal court.
Edward Lee Moody, 47, obtained $4.95 million from some 60 victims for purported investment purposes but instead used the funds to pay off earlier investors, fund his own speculative trading and pay his personal expenses, including the purchase and remodeling of a new home, the SEC says in the complaint.
At least 13 victims, many of whom were elderly, allegedly funded their investments by liquidating assets from existing IRAs.
The regulator claims that Moody, the sole owner of RIA firm CM Capital Management, represented his firm as a successful money management company that profitably invested client funds in securities. To maintain the illusion of legitimacy, Moody made periodic repayments to investors and sent fictitious monthly account statements that purported to show that clients had earned profitable returns on their securities transactions, the SEC claims.
DaRayl Davis spent client funds on a luxury mansion, theater tickets and car rentals, federal prosecutors say.
Former San Diego Chargers guard Kris Dielman says the independent broker dealer failed to supervise his former advisor.
One couple in their eighties invested more than $700,000 with the alleged schemers, representing almost the entirety of their cashed-out pension, regulators say.
The alleged Ponzi scheme began in October 2009 and was still in operation when the SEC filed the complaint in late June. Moody obtained more than $1.1 million from victims in 2018 alone, including more than $1 million from a single investor in February, according to the complaint.
Moody, a resident of Chesterfield, Virginia, could not be reached for comment as the phone number listed for his firm was not in service.
Moody launched CM Capital in June 1999. Prior to that, he worked for two registered broker-dealers from 1997 to 1999, according to the SEC’s complaint.
The court granted the SEC’s request to shut down the scheme by issuing a temporary restraining order freezing Moody’s and his firm’s assets in more than 30 brokerage and bank accounts. The SEC is seeking an injunction, disgorgement of ill-gotten gains and penalties from Moody and CM Capital.