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SEC Charges Advisor with Running $5M Scheme

By Alex Padalka July 9, 2018

A Virginia advisor firm and its sole owner are facing charges from the SEC over running a nearly $5 million Ponzi scheme, the regulator says in a litigation release.

Edward Lee Moody and his firm CM Capital Management allegedly received $4.95 million from around 60 investors and entities, according to the SEC complaint.

Moody allegedly told clients he ran a successful money management practice investing in securities, but instead allegedly used the clients’ funds to cover his speculative trading and personal expenses as well as to pay off earlier investors, the regulator says.

Among other expenses, Moody allegedly used client money to buy a house and a car, cover renovations on the home and pay his restaurant and bar tabs as well as his travel expenses, according to the press release.

To hide the scheme, Moody allegedly periodically repaid investors and sent them bogus account statements demonstrating profits on their purported investments, the SEC says.

The regulator has charged Moody with violating anti-fraud provisions, according to the press release.

The U.S. District Court for the Eastern District of Virginia, Richmond Division, where the complaint was filed, also granted the SEC’s request to temporarily freeze assets in over 30 bank and brokerage accounts controlled by Moody and his firm, the regulator says.

(Getty)

The SEC is seeking disgorgement and penalties from Moody and CM Capital as well as disgorgement from G.E. Holdings, another company the SEC alleges is wholly controlled by Moody and was used for funneling his victims’ money, according to the press release.