The Securities and Exchange Commission has charged a Virginia investment adviser firm and its sole owner with allegedly operating a nearly $5 million Ponzi scheme. The SEC also obtained an order freezing assets in more than 30 brokerage and bank accounts controlled by the defendants.
According to the SEC’s complaint, Edward Lee Moody and his wholly-owned investment adviser firm CM Capital Management LLC obtained nearly $5 million from approximately 60 individuals and entities for investment purposes.
The SEC claims that Moody represented his firm as a successful money management company that profitably invested client funds in securities. Moody and CM Capital made periodic repayments to investors and sent fictitious monthly account statements that purported to show that clients had earned profitable returns on their securities investments.
The SEC alleges that Moody had not invested any of the investors’ funds, but instead, used it to pay off earlier investors, to fund his own speculative trading, and for personal expenses. Among other expenses, Moody used investor funds to buy a house, a car, remodel his new home, travel, and cover his restaurant and bar tabs.
The SEC was granted a temporary restraining order freezing assets and other emergency relief. The SEC seeks an injunction, disgorgement, and penalties from Moody and CM Capital. The SEC also seeks disgorgement from relief defendant, G.E. Holdings, a company that the SEC alleges is wholly controlled by Moody and was used to receive and transfer victim funds.