Man charged over astrology-based Ponzi scheme
The Securities & Exchange Commission (SEC) has charged a former broker for defrauding investors - including friends and family in an astrology-based Ponzi scheme.
The US regulator allege Florida-based former broker Gurudeo “Buddy” Persaud lured investors into investing in his White Elephant Trading Company by claiming money would be safe and generate returns between 6 and 18%.
According to the SEC, Persaud did not reveal his investment strategy, which saw money invested in debt, stock, futures and real estate, was “based on his belief that markets are affected by gravitational forces”.
“Persaud’s strategy was premised on the idea that gravitational forces affect mass human behavior, and in turn, the stock market. For example, Persaud believed that when the moon exerts greater gravitational pull on the Earth, people feel dejected and are more inclined to sell securities,” the regulator claims.
The SEC alleges Persaud relied on an internet service providing directional market forecasts based on lunar cycles and gravitational pull. (article continues below)
The regulator’s complaint to the US District Court for the Middle District of Florida claims investor money was used to pay other invetors, with $400,000 lost through trading and a further $415,000 used for personal expenses.
Eric Bustillo, director of the SEC’s Miami regional office, says: “Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy.
“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 raised more than $1 million from at least 14 investors between July 2007 and January 2010, according to the regulator.
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