Adviser allegedly took $529,000 from investors in Ponzi scheme

A former investment adviser was charged by the Secretary of the Commonwealth in Massachusetts for engaging in a Ponzi scheme. Stephen S. Eubanks has taken at least $529,000 from friends, neighbors and their families over several years, according to a complaint notice from the office of the secretary Tuesday. Investors are seeking to recover their money. The complaint notice said that in 2011 Mr. Eubanks posed as a successful hedge fund manager who operated Eubiquity Capital, a limited liability company. He asked investors for money to invest in stocks, options and other securities. Instead, $145,000 was used to finance his lifestyle and $140,000 was used to repay earlier investors. To maintain the Ponzi scheme, Mr. Eubanks obtained more money from new investors, which again was used to pay for his personal expenses, including vacations to Martha's Vineyard, boat payments and partial payment of his federal tax debt, the notice said. Other portions were used to pay earlier investors. He lost all of the investors' funds, according to the notice. Mr. Eubanks could not be reached for comment. (More: State regulators reveal top enforcement targets and the price they pay) “This operation, almost a textbook Ponzi scheme, took advantage of the trust of friends and family,” said Secretary of the Commonwealth, William F. Galvin, in the notice. According to Mr. Eubanks' BrokerCheck profile, the Chicago Stock Exchange initiated the investigation, stating that Mr. Eubanks failed to report Eubiquity Capital. He was a registered adviser with Bright Trading since March 2010, and was terminated in August 2016 in light of the investigation. Mr. Eubanks began his career with IDS Life Insurance Company and American Express Financial Advisors, according to BrokerCheck. In 1994, he moved to Smith Barney, where he worked for over three years before moving to UBS Financial Services and worked for close to seven years. In 2004, Mr. Eubanks joined Bear Stearns & Co. for one year before moving to Oppenheimer & Co. He was not registered with any Finra firm until 2010 after he separated from Oppenheimer due to a customer complaint in 2006. According to his Brokercheck profile, Mr. Eubanks had three customer disputes listed that have been closed.