Ponzi Man Was an Astrologer, SEC Says
(CN) - An Orlando broker took $1 million in a Ponzi scheme, and stole $415,000 of it, through his appropriately named "White Elephant Trading Company," and didn't tell his victims that "his trading strategies were based on lunar cycles and the gravitational pull between Earth and the moon," the SEC claims in Federal Court.
The SEC sued Gurudeo "Buddy" Persaud in Orlando Federal Court.
It claims he began his scheme "no later than July 2007"-the month after he founded White Elephant-and that by November that year it had "devolved into a Ponzi scheme."
Persaud, 47, "raised more than $1 million from investors through this fraudulent scheme," and "promised to pay investors 6 percent to 18 percent annual returns," the SEC says in its complaint.
"He made numerous misrepresentations and omissions to investors, foremost among them failing to disclose his trading strategies were based on lunar cycles and the gravitational pull between Earth and the moon.
"Persaud also omitted disclosing that he misappropriated approximately $415,000, representing nearly half of the investors' contributions, to support his and his family members' lifestyles.
"Of the investor money Persaud did trade, he lost $400,000, and he traded for net losses beginning the first month he received investor contributions. To hide this from investors, Persaud repaid earlier investors with money collected from new investors in typical Ponzi scheme fashion," the complaint states.
Persaud was a registered representative with a Florida-based broker dealer from 2003 until August 2010, the SEC says. He created White Elephant, a Florida LLC, in June 2007. He named two of his sons as the company's managing members, but he managed and ran it, the SEC says.
"Persaud believed that when the moon is positioned so there is a greater gravitational pull on humans, they feel down and are therefore more inclined to sell securities in the markets," the SEC says in the complaint.
But he didn't tell his suckers that, nor did he tell them "that in making at least 90 percent of his trading decisions, he relied on directional market forecasts based on lunar cycles and gravitational pull provided by an Internet service," according to the complaint.
All told, he lost $400,000, stole $415,000, and doled out $225,000 in Ponzi payments, according to the complaint.
In a statement announcing the lawsuit, the SEC's Miami regional director said, "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."