A New York man allegedly posing as a money manager defrauded three brokerage firms of more than $2 million and robbed investors of another $450,000, according to charges filed by the Securities and Exchange Commission.
The SEC alleges that Ronald Feldstein opened accounts at three brokerage firms from September 2008 through February 2009 under the names Mara Capital Management LLC and Vita Health of America LLC.
In a so-called free-rider scam, the SEC alleges that he made large stock purchases without the funds to pay for them.
In a complaint filed last Tuesday in federal court in New York, the SEC alleged that Mr. Feldstein refused to settle trades that were unprofitable, leaving the brokers with more than $2 million in losses. If the stock price rose after the trade date, he allegedly paid for the securities with the sales proceeds and pocketed the difference.
In a separate scheme, the SEC alleges that from 2009 until late 2011, Mr. Feldstein solicited about $450,000 through Trademore Capital Management LLC for investments in a penny stock, a fashion company initial public offering and a hedge fund.
He allegedly induced the owners of dry cleaning and car-leasing businesses he had long patronized, as well as the proprietor of a gelato enterprise, to participate, promising big returns. Instead, Mr. Feldstein allegedly used the money to fund his expensive habits, including summers in the Hamptons and trips to casinos.
“Without sufficient assets to pay for his stock purchases, Feldstein illegally arranged trades in which he got the profits if he won, and left brokerage firms holding the bag if he lost,” Andrew Calamari, director of the SEC New York office, said in a statement.
The complaint didn't name the brokerage firms involved.
“Mr. Feldstein's trading activities were at all times legitimate,” said Michael Bachner, a partner at Bachner & Associates PC, who is representing him.