According to the SEC's complaint, Persaud raised more than $1 million between July 2007 to January 2010 from 14 investors in three states: Florida, Connecticut, and New York. At least two of his investors were "unsophisticated investors." Persaud is accused of keeping $415,000 of the money he collected for himself and his family. He allegedly used the money to pay for a mortgage, his kids' tuition, family vacations, and clothes. Of the $530,000 in investor money Persaud did invest in stocks, futures, and options, he lost approximately $400,000, which, go figure, with a trading principle like this:
The primary principle underlying Persaud's trading strategy was that the gravitational pull between the moon and Earth affects mass human behavior, which in tum affects the stock markets. For example, Persaud believed that when the moon is positioned so there is a greater gravitational pull on humans, they feel down and are therefore more inclined to sell securities in the markets.
Persaud, who allegedly lured investors with promises of annual returns between 6 percent and 18 percent, formed While Elephant Trading Company LLC in July 2007, while working as a registered representative at an Orlando, Florida broker-dealer. He marketed White Elephant "primarily" to family, friends and clients at his firm.
The complaint states that one of Persaud's investors was a widow who "worked two jobs to make ends meet," and who invested $175,000 from life insurance proceeds received after her husband's sudden death. Another person invested $461,000 in August 2008 after Persaud promised a 12 percent annual return.
Between November 2007 and January 2011, Persaud paid his investors at least $225,000 from other investors contributions. According to the SEC, Persaud kept no records, emailed investors false account balances, and never registered with the SEC in "any capacity." In September 2011, Florida's Secretary of State dissolved White Elephant for failure to file an annual report.
"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 Bustillo, Director of the SEC's Miami Regional Office, said in a statement.
The complaint, filed Wednesday in U.S. District Court in the Middle District of Florida, seeks disgorgement of ill-gotten gains plus financial penalties.