June 22, 2012
--- Florida broker saw lunar effects
on the stock market, but managed to miss the Securities
and Exchange Commission (SEC) fraud charges coming his way. ---
The SEC charged a former broker in
Orlando with defrauding investors in an astrology-based Ponzi scheme,
alleging that Gurudeo “Buddy” Persaud lured family, friends and others into
investing in his firm, White Elephant Trading Company LLC, by falsely
guaranteeing their money would be safe and yield lofty returns of 6% to 18%. He
told investors he would invest in the debt, stock, futures and real estate
markets, but did not reveal that his trading strategy was based on his belief
that markets are affected by gravitational forces.
According to the SEC’s complaint,
filed in U.S. District Court for the Middle District of Florida, Persaud used
investors’ money to make payments to other investors, the hallmark of a Ponzi
scheme.
Persaud also lost $400,000 of
investor funds through his trading and diverted at least $415,000 to pay for
his own expenses, the SEC alleged. The same month Persaud began receiving
investor money, he started using some of the money for personal expenses. According
to the SEC, Persaud created phony account statements to hide trading losses and
give investors a false sense of security.
“Persaud preyed on people who
trusted him by promising high and steady returns while hiding his
unconventional trading strategy,” said Eric I. Bustillo, director of the SEC’s
Miami Regional Office. “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.”