According to the Securities and Exchange Commission (SEC), Edward Lee Moody, the owner of CM Capital Management LLC in Virginia has been charged with operating a $5 million Ponzi scheme that allegedly defrauded approximately 60 investors. The SEC has been granted a restraining order to freeze assets in more than 30 brokerage and bank accounts controlled by CM Capital Management. They are also seeking an injunction, disgorgement, and fines and penalties against Moody and CM Capital Management.
According to the SEC, Moody represented CM Capital as a successful money management firm that invested client money in securities. To support alleged profitable investments, CM Capital Management created fictitious monthly account statements for investors that showed high returns. Instead of actually investing his clients’ money, Moody used it to pay off earlier investors and to fund his personal trading and expenses for a new house, a new car, exotic travel, and other luxury items. Moody created a separate company, G.E. Holdings, to receive and transfer funds from exploited investors. At least 13 of Moody’s alleged Ponzi scheme victims were elderly adults who funded their investments by liquidating existing IRA accounts.
Moody launched CM Capital Management in June 1999, and his Ponzi scheme activities began in October 2009. In addition to close to $5 million in losses for investors between 2009 and 2017, Moody allegedly took more than $1.1 million from investment fraud victims in 2018.
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Ponzi schemes take millions from investors. They promise low-risk investments with high returns. Rather than investing client funds, money collected from new investors is used to pay prior investors. Since Ponzi schemes have no legitimate earnings, they require a constant flow of new money to succeed. When new investors fall off or a lot of existing investors cash out, Ponzi schemes typically collapse rather quickly.
Investors who have been victimized by investment fraud may be able to recover damages, which could include investment principal, expected gains if money had been invested appropriately, arbitration costs, and attorney’s fees. In cases where egregious misconduct is involved, investors may be entitled to punitive damages. Most cases against brokerage firms are handled through mandatory FINRA arbitration. For help with investment fraud loss, contact the attorneys at Meyer Wilson at (614) 532-4576 today to set up a free case consultation.
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