Boston-area hedge fund manager Raymond Montoya, who led the RMA Strategic Opportunity Fund LLC, was arrested and charged by federal prosecutors with running a Ponzi scheme.

The federal charges on Wednesday followed a civil lawsuit in June in which the Massachusetts Securities Division claimed Montoya committed securities fraud when he told investors that he had $5 billion of assets in his fund in 2015. In sworn testimony, he said the fund’s high-water mark was about $20 million.

U.S. prosecutors claim Montoya committed mail and wire fraud by misleading investors about the fund’s performance. He diverted millions of dollars of investors’ money and used it for personal expenses including luxury vehicles, the U.S. said in a statement.

Montoya, 69, of Allston, was released on a $100,000 bond following his Wednesday appearance in federal court, his lawyer Christopher Bruno said. He’s in plea negotiations with the government "in an effort to resolve this case short of trial," Bruno said in an emailed statement.

"Mr. Montoya continues to cooperate with law enforcement authorities,” Bruno said. “His efforts are focused on preserving assets for ultimate return to investors."

The case is U.S. v. Montoya, 17-mj-02228, U.S. District Court, District of Massachusetts (Boston).

This article was provided by Bloomberg News.