Stockbroker Who Claimed to Trade Based on Moon Cycles Accused of Fraud
Gurudeo “Buddy” Persaud, a former broker from Orlando, Florida, has been charged with operating an astrology-based Ponzi scheme and fraudulently raising more than $1 million from at least 14 investors between July, 2007 and January, 2010.
Persaud convinced his customers, including family and friends, to invest in White Elephant Trading Company, LLC, a company he operated, promising them returns as high as 18% and the safety of their money, according to the charges.
Persaud told his investors that the money would be invested in debt, stock, futures, and real estate markets, when in fact he used part of the money to pay other investors and for personal expenses, according to SEC’s complaint. The former broker is said to have started using part of the investors’ money for personal expenses the same month he began receiving the money, having diverted at least $415,000 for personal expenses. He also lost $400,000 through trading and to hide his trading losses, he created phony account statements, the regulators alleged.
In an unusual twist, Persaud’s investment strategy was apparently based on the idea that gravitational forces affect human behavior and hence the stock market. For instance, Persaud thought that people feel despondent when the moon exerts greater gravitational pull on the Earth and thus are more likely to sell securities. In carrying out his strategy, he is said to have used Internet market forecasts based on lunar cycles and gravitational pull.
Persaud did not disclose his strategy to his investors, according to the lawsuit.
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