SEC Obtains Judgment Against Ponzi Scheme Operator
Litigation Release No. 24508 / June 21, 2019
Securities and Exchange Commission v. Edward Lee Moody, Jr., et. al., No. 3:18-cv-00442 (E.D.V.A. filed June 27, 2018)
In the Matter of Edward Lee Moody, Jr.; Administrative Proceeding File No. 3-19212
On June 13, 2019, the U.S. District Court for the Eastern District of Virginia entered a default final judgment against a Virginia investment adviser firm and a settled final judgment against its sole owner, who were previously charged by the SEC with operating a nearly $5 million Ponzi scheme.
On June 27, 2018, the SEC charged Edward Lee Moody, Jr. and his wholly-owned investment adviser firm CM Capital Management, LLC, with operating a Ponzi scheme that defrauded dozens of retail investors over a period of at least nine years. In settling the SEC's charges against him, Moody acknowledged that he pled guilty in a parallel criminal action to operating a scheme to defraud investors. In that matter, Moody admitted that he fraudulently represented to investors that he would invest their funds on their behalf, when, in fact, he misappropriated investor funds for his personal benefit. Moody was sentenced to a term of 13 years in prison.
In the final judgments against them in the SEC's case, both Moody and CM Capital are permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition, Moody has agreed to pay disgorgement in the amount of $3,025,067, plus prejudgment interest of $32,181, which shall be deemed satisfied by the Orders of Forfeiture and Restitution entered against him in the criminal action.
In a related administrative proceeding filed today, Moody has agreed to the issuance of an SEC order permanently barring him from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or national recognized statistical rating organization.
The SEC appreciates the assistance of the United States Attorney's Office for the Eastern District of Virginia, the Federal Bureau of Investigation, the IRS-Criminal Investigation Division, and the Virginia State Corporation Commission. The SEC's litigation in this matter is now concluded.