Four months after he was sued in a civil case by the Securities and Exchange Commission for allegedly bilking 60 investors out of nearly $5 million, a local investment adviser now has the feds coming after him for criminal charges.
Chesterfield resident Edward Lee Moody Jr. was charged Oct. 9 in Norfolk federal court on two criminal counts.
The criminal case alleges that for 13 years, from 2005 to 2018, Moody ran a scheme that collected approximately $6.1 million from 53 investors.
The U.S. government claims, similarly to the SEC’s Ponzi scheme allegations filed in June, that Moody used new investor money to pay returns to old investors, which the government calls “lulling payments.”
It alleges that he never opened investor accounts for his clients as promised; rather, he just moved the money around a pool of bank accounts he controlled and took the cash for his personal use.
“Among other things, the defendant, without the knowledge or approval of the investors, used approximately $1.4 million of investor monies for business expenses and to purchase a house, make car loan payments, shop and travel to Las Vegas and other destinations,” the government alleges.
He also used $885,000 of investors’ money to buy and sell securities for himself.
The case claims he sent bogus monthly account statements to clients that he modeled after Scottrade statements.
The SEC’s case also named as defendants Moody’s CM Capital Management LLC and G.E. Holdings Corp., while Moody is the lone defendant in the criminal case. CM Capital operated in an office in Virginia Beach.
The criminal charges Moody now faces are mail fraud and engaging in monetary transactions in criminal derived property.
The mail fraud charge stems from him using FedEx to receive a $1.03 million check drawn from a client’s IRA account. The second count stems from him wiring $364,000 of unlawfully obtained funds to purchase a home in the name of CM Capital.
Moody was charged through the so-called criminal information process, which does not require an arrest or a grand jury indictment, and typically involves cooperation from the defendant.
Moody could not be reached for comment, as numbers listed for his company have been disconnected.
He is represented in the criminal matter by Hampton Roads-based attorney Laura Tayman, who declined to comment when reached Monday.
The SEC’s civil case was put on hold in August to let the criminal proceedings take precedent. It alleged 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.