SAN DIEGO (CN) – A 65-year-old man from the San Diego suburb of Encinitas on Thursday that his Edgefund Capital “hedge fund” was actually a Ponzi scheme, and that he defrauded his customers of nearly $5 million.
John Clement’s plea is subject to acceptance by U.S. District Judge Irma Gonzalez, who will sentence Clement on Dec. 20. He faces up to 20 years in prison and a $250,000 fine.
“Among other false representations, Clement claimed that investors would make between 1.5 percent and 2 percent per month with little or no risk involved,” the U.S. Attorney’s Office said in announcing his plea.
Clement sent his clients bogus account statements showing they were “routinely earning substantial positive returns when, in fact, they were not earning any returns, as Clement was using their funds to pay personal expenses,” prosecutors said in the statement.
He began his scam in 2007, claiming his company made money by stock trading.