Hedge Fund Manager Pleads Guilty in $2.6 Million Ponzi Scheme
SAN DIEGO—Paul Moore IV pleaded guilty in federal court today to defrauding local investors through his purported hedge fund. Moore admitted that he falsely told investors he was an experienced financial professional and investment adviser, and that his “hedge fund” traded investors’ money in the stock market on their behalf. In reality, Moore had no relevant education or experience, and was actually stealing most of the investors’ money in the course of running a Ponzi scheme.
In a parallel action, the Securities and Exchange Commission announced today that it has filed a civil complaint alleging that Moore siphoned nearly $2 million of client funds to pay travel expenses and buy retail goods. Please see http://www.sec.gov/news/pressrelease/2015-148.html.
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.” Moore told two investors that he had earned an undergraduate degree in economics from a respected state university, had worked as a senior analyst at a large, national securities firm, had registered himself and his firm with securities regulators, and was making tremendous profits for his clients through his knowledge and expertise in securities trading. In truth, Moore quit college without earning any credits toward a degree, had never worked for the securities firm he touted, did not register himself or his fund with regulators, and when he did trade a small portion of the investor funds entrusted to him, he was losing money.
Moore ultimatley stole most of clients’ funds in the course of perpetrating a Ponzi scheme. 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. 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. 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.
United States Attorney Laura E. Duffy warned 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.
The defendant is scheduled to be sentenced by U.S. District Judge Cynthia Bashant on October 5, 2015 at 9:00 a.m.
Criminal Case No. Paul Moore IV Age: 51 San Diego, CA
SUMMARY OF CHARGES
Securities Fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff. Maximum Penalties: 20 years’ imprisonment, $5,000,000 fine, $100 special assessment, restitution.
Federal Bureau of Investigation Securities and Exchange Commission