SAN DIEGO
Paul Moore IV had a success story and many believed it.
Moore told investors he earned an undergraduate degree in economics from a respected state university, had worked as a senior analyst at a large national securities firm, registered himself and his firm with securities regulators and was making a lot of money, officials said.
But it was all a lie.
The truth was that Moore quit college without earning any credits toward a degree, never worked for the securities firm and didn’t register himself or his fund with regulators.
When he did trade a small portion of the investor funds entrusted to him, he lost money.
Last week, the 51-year-old Moore plead guilty in federal court to defrauding local investors through his purported hedge fund.
Moore admitted he was an inexperienced financial professional and investment adviser. Also that his “hedge fund” traded investors’ money in the stock market on their behalf, officials said.
Moore, of San Diego,
ran a Ponzi Scheme and stole most of the investors’ money.
Of the $2.8 million he “managed” for investors, Moore used $1.7 million of it for personal travel, shopping sprees, meals, entertainment, and other expenses, according to authorities.
To keep the scheme going and to conceal his theft, Moore complied with certain investor’s redemption requests by paying them with funds deposited by other, usually more recent, investors, officials said.
And when it came time to tell investors about his performance in the stock market, Moore added another deception – he created and distributed false account statements showing large volumes of highly profitable trades that he supposedly made on behalf of investors.
The problem, of course, was that the trades never happened and Moore had concocted the account statements from whole cloth.
In a civil complaint, the Securities and Exchange Commission announced last week that Moore siphoned nearly $2 million of client funds to pay travel expenses and buy retail goods.
According to his plea agreement in the criminal case, Moore established Coast Capital Management LLC in 2009, when he began soliciting friends and acquaintances to invest in this “hedge fund,” officials said.
The defendant is scheduled to be sentenced on Oct. 5.
Moore is facing up to 20 years in federal prison, officials said.
The case was investigated by the FBI and the Securities and Exchange Commission
(How to Spot a Ponzi Scheme, according to Oregon state officials.)
U.S. Attorney Laura E. Duffy warns investors to perform their own due diligence before turning money over to an investment advisor, and to be wary of performance figures that seem “too good to be true.”
The public can obtain additional information regarding Ponzi Schemes, and how to avoid them, on the Securities and Exchange Commission’s website posts, at http://www.sec.gov/answers/ponzi.htm.