A Langhorne, Pa., former stockbroker has been sued by the SEC for allegedly taking $15.5 million from 50 investors and using the money to buy a Florida condominium, vacations and other luxuries.
Malcolm Segal, 69, also faces criminal charges brought by the U.S. Attorney for the Eastern District of Pennsylvania in connection with the same Ponzi and fraud scheme, but those charges focus on $3 million of the total amount allegedly stolen.
Segal sold certificates of deposit to brokerage customers, claiming he could get up to 12 percent interest, according to the SEC. In some instances, Segal purchased CDs on behalf of investors, but he secretly redeemed them early and took the proceeds; other times, Segal did not purchase CDs at all despite telling customers he had, the SEC said.
Besides spending investor money on himself, Segal used it in a Ponzi scheme for purported interest payments and principal repayments to earlier investors, according to the SEC. The SEC also says Segal eventually started stealing directly from his customers’ brokerage accounts in a last-ditch effort to keep funding the Ponzi payments.
The SEC is asking for a return of the money plus penalties.
In the criminal indictment, Segal is charged with six counts of mail fraud and three counts of wire fraud committed while he was working for Aegis Capital Corporation between 2011 and 2014.
In addition to raising money by supposedly selling lucrative CDs, the U.S. Attorney says Segal stole from brokerage accounts of three of his clients at Aegis by making unauthorized wire transfers of funds from those accounts to a bank account he controlled.
Segal has not been registered with the SEC or Finra since 2014 and no longer works for Aegis.