Chesterfield resident pleads guilty in Ponzi scheme case

richmond federal courthouse

Moody’s case was first brought to light in an SEC case filed in the U.S. District Court for the Eastern District of Virginia on Broad Street. (BizSense file photo)

A local investment advisor now faces federal prison time after pleading guilty this week to bilking dozens of investors out of more than $6 million.

Edward Lee Moody Jr., who resides in Chesterfield and keeps an office in Virginia, admitted in federal court in Norfolk on Tuesday to committing one count of mail fraud and one count of engaging in monetary transactions in criminal derived property.

He was released on $25,000 bond and must return to court for sentencing on Feb. 5. The plea included waiving his right to indictment and a jury trial.

He faces a maximum of 20 years in prison on the mail fraud charge and up to 10 years on the second count, as well as a fine of $250,000, full restitution, forfeiture of assets and three years of supervised release.

He must pay restitution of $6.1 million, which could include forfeiture of certain assets. Items listed in court records as subject to forfeiture include a 3,700-square-foot home at 9300 Ramsgate Lane in North Chesterfield, a 2011 Porsche 911 and $1.25 million seized from his bank accounts.

His sentence is likely to be below the maximums, as he has agreed to fully cooperate with federal prosecutors.

Provisions of his bond include restricting his travel to Virginia and Michigan until Dec. 1, after which he can’t leave the commonwealth.

Tuesday’s guilty plea came four months after Moody was sued in a civil case by the Securities and Exchange Commission for allegedly bilking 60 investors out of nearly $5 million in what was described as a Ponzi scheme.

He was then charged Oct. 9 in Norfolk federal court on the 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 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’s attorney Laura Tayman has declined to comment on the case.

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