Ex-Money Concepts Registered Representative Faces SEC Charges For Running Astrology-Influenced Ponzi Scam

The Securities and Exchange Commission is charging Gurudeo “Buddy” Persaud,” an ex-Money Concepts registered representative, with financial fraud. The SEC alleges that while running a Ponzi scam involving transactions influenced by his astrological beliefs, Persaud lost $400,000 of investor money in trades while diverting at least $415,000 to cover his personal spending. The Commission is seeking Persaud’s alleged ill-gotten gains and wants injunctive relief and financial penalties imposed against him. (A spokesperson for Money Concepts, which is based in Florida, says that none of the investors that were bilked in the scam were its clients at the time.)

According to the SEC, Persaud believes that the gravitational forces of the earth can influence stock prices, while the moon can make people feel like selling their securities. When he made trading decisions between 6/07 and 1/10, he is accused of mainly depended on an online service that offers directional market forecasts according to the earth’s gravitational pull and the moon’s cycles. Clients were not aware that he was using astrology to make trades.

Persaud raised about $1 million from 14 investors, while drawing in investments through White Elephant Trading Co., his now defunct company that sold and offered securities in investment contract form for its supposed private equity fund. The Commission says that to hide his involvement with White Elephant, Persaud appointed two of his sons as its only managing members even though he was the one who ran the company, made all trading decisions, controlled is bank and brokerage accounts, and had contact with its clients.

Persaud’s alleged victims included family and friends, who were told that their money would be placed in stock, debt, real estate markets, and futures and bring in 6-18% percent returns. The Commission says that Persaud used investors’ money to pay other investors while he generated bogus account statements to make clients feel secure and conceal trading losses. He promoted the fund as an investment opportunity that was a risk-free/low risk way to make high returns within a short time frame, while presenting White Elephant as employing strict financial management strategies.

One investor who was allegedly told he would get an 18% return at year’s end gave Persaud $50,000. Another prospective client received a marketing document called the White Elephant Trading Co. LLC, Conservative Fixed Income Fund that said White Elephant planned to raise up to $10 million and built Persaud up as an experienced, licensed certified financial planner. The Commission contends that Persaud violated sections of the Securities Act of 1933, the Securities Exchange Act of 1934, Exchange Act Rule 10b-5, the Investment Advisers Act, and Advisers Act Rules (2) and 206(4)-8(a)(1).

SEC Charges Rep for Running Astrology-Based Ponzi Scheme, Financial Planning, June 21, 2012

Read the SEC Complaint (PDF)

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Alleged Ponzi-Like Real Estate Investment Scam that Defrauded Victims of $9M Leads to SEC Charges Against New Jersey Man, Institutional Investor Securities Blog, May 24, 2012

Ponzi Scam Receiver Can Go Forward with Securities Claim Against Texas Investor Who Benefited From the Fraud, Stockbroker Fraud Blog, June 26, 2012

SEC Charges New York-Based Fund Manager and His Two Financial Firms Over Alleged $11M Ponzi Scheme, Stockbroker Fraud Blog, May 28, 2012
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