The federal government has frozen the assets of a local investment adviser, as the Securities and Exchange Commission has accused him of running a Ponzi scheme that allegedly bilked 60 investors out of nearly $5 million.
The SEC on June 27 filed a complaint against Edward Lee Moody Jr., a resident of Chesterfield, along with his firms CM Capital Management LLC and G.E. Holdings Corp., claiming he used funds from new clients to pay returns to his older investors, along with lining his own pockets.
“In reality, Moody invested none of the $4.95 million, but instead, he used the investor funds to pay off earlier investors, to fund his own speculative trading, and for personal expenses,” the SEC claims.
Those personal expenses included the purchase of a $364,000 house, a car, a remodeling of his home, travel to Las Vegas, and restaurant and bar tabs.
Apparently he had little luck investing on his own behalf. The SEC claims he used $884,000 of his clients’ money to invest for himself – and lost at least $628,000 of it.
The 18-page civil complaint initially was filed under seal from public view, but was unsealed July 2.
The asset freeze was put into place to prevent Moody from accessing the funds, as the SEC claims his scam was ongoing. He allegedly has brought in $1.1 million from victims thus far in 2018 and beginning in February, transferred at least $42,000 to offshore accounts in the names of unknown individuals.
Moody, 47, is the sole employee of CM Capital Management and its only investment adviser, the SEC states.
G.E. Holdings is a Wyoming corporation Moody set up in 2017 and allegedly was used to receive and hold investor funds.
His alleged scheme began in October 2009 and his victims were primarily in Virginia, Maryland and California.
The scheme was perpetuated in part by fake monthly account statements Moody allegedly doctored and sent to clients, purporting to show where their money had been invested and supposed profitable returns.
He modeled the statements after those of well-known brokerage Scottrade, replacing the Scottrade name with G.E. Holdings.
The statements also said his firms were members of FINRA and the SIPC, the regulatory bodies that oversee securities brokers. Neither ever has been a member of either organization, the SEC claims.
Moody did not return a message left on his personal line by press time. Two other phone numbers listed for CM Capital Management were no longer in service. Moody does not yet have an attorney listed on his behalf in the court docket.
While Moody resides in Chesterfield, the SEC’s complaint states that CM Capital Management keeps an office in Virginia Beach. Online listings show the firm’s address as 468 Investors Place, just south of Virginia Beach Town Center.
The court granted an extension to the asset freeze until July 25, when Moody must appear for a hearing at 10 a.m. in the Richmond federal court building.
The government alleges violations of provisions of the federal Securities Exchange Act, the Securities Act and the Investment Advisers Act.
It seeks to force Moody to return the ill-gotten money, as well as pay an undetermined amount of civil penalties.
The SEC said the Virginia State Corporation Commission assisted in the investigation.