SEC charges Virginia firm with $5 million Ponzi scheme

Edward Lee Moody and CM Capital Management are charged with defrauding 60 investors

Jul 3, 2018 @ 4:59 pm

By Sarah Min

The Securities and Exchange Commission charged a Virginia investment adviser firm and its owner with operating a nearly $5 million Ponzi scheme. The SEC was granted an order to freeze the assets in more than 30 brokerage and bank accounts controlled by the firm.

The SEC alleges that Edward Lee Moody defrauded dozens of investors through his Virginia Beach-based firm, CM Capital Management. According to the SEC, Mr. Moody obtained $4.95 million from about 60 individuals and entities for investment purposes.

To present the firm as a successful money management company, Mr. Moody and CM Capital periodically made repayments to investors and sent fictitious monthly account statements that purported to show profitable returns for clients.

Instead, Mr. Moody used the money to pay off earlier investors, to fund speculative trading and to pay his personal expenses, including purchasing a house and a car.

The District Court for the Eastern District of Virginia granted the SEC's request for a temporary restraining order to freeze assets and other emergency relief. The SEC is also seeking an injunction, disgorgement and penalties from Mr. Moody and CM Capital.

Additionally, the SEC is seeking disgorgement from G.E. Holdings, a company that the SEC alleges is controlled by Mr. Moody and used to receive and transfer victim funds.

Reached by phone, Mr. Moody said he had no comment, but noted that he is meeting with the SEC Thursday.

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