There are many methods by which investors try to beat the stock market. Basing one's strategies on the gravitational pull of the earth and lunar cycles doesn't usually come to mind as one of them. But that was the method of choice for one Florida broker who claimed he was maintaining a private equity fund but is now accused of running a ponzi scheme.
The Securities and Exchange Commission (SEC) announced in a press release that Gurudeo “Buddy” Persaud of Orlando is facing charges for allegedly defrauding family and friends with his "White Elephant Trading Company" investment firm.
According to the SEC, Persaud promised returns ranging from 6 to 18 percent. What he did not mention were his unconventional astrology-based investment methods.
Persaud reportedly told his clients that he would be investing their money in debt, stock, futures, and real estate markets. In reality, he has subscribed to the idea that gravitational forces affect human behavior and, in turn, the stock market.
“Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy,” Eric I. Bustillo, director of the SEC’s Miami Regional Office, said in the press release. “When Persaud blatantly lied to investors and hid their losses through a Ponzi scheme, he should have known that an SEC enforcement action was in the stars.”
Persaud worked with at least 14 investors between July 2007 and January 2010 and according to the SEC complaint, he told them that the fund was risk-free.
Instead, he misappropriated around $415,000 -- nearly half of the investment money -- for his own personal use. The claim goes on to say that Persaud worked in "typical Ponzi scheme fashion" by repaying earlier investors with money he brought in from new investors.
The name of the fund certainly seems unfortunate in light of the SEC allegations New York magazine has argued that it should have served as a red flag.
"What kind of sales pitch convinces fourteen investors to give money to an astrology-based firm whose name literally means 'a possession entailing great expense out of proportion to its usefulness or value?'"
Fri, 22 Jun 2012 21:59 EEST - Huffington Post
Ponzi Schemer Invested Based On Astrology