A Virginia Beach, Va., investment advisor has been charged with operating a nearly $5 million Ponzi scheme that he used to fund his own speculative trading, the Securities and Exchange Commission announced Tuesday.
Edward Lee Moody Jr. and his wholly owned investment advisory firm, CM Capital Management LLC, have been charged with fraudulently raising $4.95 million from 60 individuals and entities. The SEC has been granted a freeze on the assets in 30 brokerage and bank accounts controlled by Moody and his firm.
According to the SEC's complaint, Moody said his firm was a successful money management company that profitably invested clients’ funds in securities, when he actually did not invest any of the money.
To maintain the impression he was making investments, Moody and CM Capital made periodic repayments to investors out of new money and sent fictitious monthly account statements that purported to show that clients had earned profitable returns on their securities investments.
Instead, he used the money to pay off earlier investors, to fund his own speculative trading, and for personal expenses such as buying and remodeling a house, traveling and covering restaurant and bar tabs, the SEC said.