A River Vale, N.J., fund manager who called himself a registered investment advisor when he was not, has been charged with cheating his friends and family members out of $1.5 million in investments, the U.S. attorney for the Southern District of New York announced Thursday.
William J. Wells, the sole owner of Promitor Capital Management LLC, also in River Vale, enticed 30 friends, family members and colleagues to invest in Promitor funds in part by operating a Ponzi scheme that used new investor funds to pay off old investors, according to the U.S. attorney.
Wells was arrested Wednesday on one count of wire fraud and one count of securities fraud. Wells also used the money for his personal use to pay off credit card debts and other expenses, the criminal charge says.
Wells issued false reports to investors telling them they were making money when in fact he had less than $1,000 under management by last month, the U.S. attorney says.
In addition to the criminal charges, the Securities and Exchange Commission has filed a civil complaint for fraud against Wells for the same scheme, which was ongoing from 2009 to the present, the complaint says.
According to the SEC complaint, when one investor was unable to get Wells to return a portion of his investment, he asked Wells by text, “You running Ponzi scheme? Why the heck is this going down like this.” Wells later responded by text saying, “My explanation is that I’m an idiot and was trying to get some big trades to. . . make you more money.”
The SEC is seeking disgorgement of the ill-gotten gains.