UNBELIEVABLE: Now, An ‘Astrology-Based Ponzi Scheme,’ SEC Says; ‘Trading Strategies Were Based On Lunar Cycles And . . . Gravitational Pull Between Earth And The Moon’

“Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy. When Persaud blatantly lied to investors and hid their losses through a Ponzi scheme, he should have known that an SEC enforcement action was in the stars.” — Eric I. Bustillo, director of the SEC’s Miami Regional Office, June 21, 2012

BULLETIN: The SEC has gone to federal court in Orlando, Fla., alleging that Gurudeo “Buddy” Persaud was operating a Ponzi scheme and making trading decisions “premised on the idea that gravitational forces affect mass human behavior, and in turn, the stock market.

“For example,” the SEC charged, “Persaud believed that when the moon exerts greater gravitational pull on the Earth, people feel dejected and are more inclined to sell securities.”

One of the victims was a widow “who worked two jobs to make ends meet,” the SEC said.

The woman “invested $175,000 from life insurance proceeds from her husband’s sudden death,” the SEC said.

Persaud, 47, of Orlando, has been charged with fraud after allegedly telling investors their money would be safe and would generate annual returns of between 6 percent and 18 percent. He was associated with an entity known as White Elephant Trading Company LLC, the SEC said.

The scheme affected at least 14 investors and gathered more than $1 million, operating between July 2007 and January 2010, the SEC charged.

“[I]n making trading decisions, Persaud chiefly relied on an Internet service that provided directional market forecasts based on lunar cycles and gravitational pull,” the SEC alleged.

“Persaud touted his experience in the financial services industry as a certified financial planner and gave investors his personal guarantee their principal contributions were secure,” the SEC charged. “He made numerous misrepresentations and omissions to investors, foremost among them failing to disclose his trading strategies were based on lunar cycles and the gravitational pull between Earth and the moon.”

Moreover, the SEC said, Persaud “pooled the [investor] contributions and traded or misappropriated them as he saw fit. Thus, even if Persaud wanted to provide account balances, he could not have. Instead, he invented them.”

In November 2010, the SEC said, Persaud emailed a purported account letter to an investor who’d plowed $75,000 into the scheme. The letter falsely showed the investor had an account balance of $108,361.

In reality, the SEC charged, “White Elephant’s bank and brokerage account statements showed less than $20,000 remaining in all the accounts combined, and trading losses of approximately $399,000.”

By Jan. 5, 2011, the SEC charged, Persaud told another investor that her account balance was $175,313.23 at the end of December 2010.

By that time, however, “White Elephant’s bank and brokerage account statements showed approximately $5,300 remaining in all the accounts combined.”

“By February 2011, there were no funds remaining in the White Elephant bank accounts because Persaud misappropriated investor contributions, fraudulently paid investor contributions as purported investment returns to conceal investor losses, and lost the remainder of investors’ money in trading based on his lunar cycle trading strategy,” the SEC charged.