Boston-Based Hedge Fund Manager Charged With Running Ponzi Scheme

Aug 3 2017 | 7:02pm ET

Federal authorities have arrested and charged hedge fund manager Raymond Montoya, who led Boston-based RMA Strategic Opportunity Fund, with running a multi-million dollar Ponzi scheme. 
 
The charges come several weeks after the Massachusetts securities regulator filed a civil lawsuit accusing Montoya of securities fraud. In the federal action, he was charged with wire and mail fraud related to alleged misrepresentations of his fund’s performance. 
 
Between 2009 and June 2017, Montoya allegedly told investors, which included family, friends, and acquaintances in Massachusetts, Ohio, and California, that his fund was earning substantial returns when by 2014, it was sustaining substantial losses. According to court documents, Montoya also did not invest all of the capital he received from investors in stocks and bonds as promised, but instead diverted a portion to personal expenses such as luxury vehicles and the mortgage on his son’s residence, according to a statement Thursday by the U.S. Department of Justice.
 
Montoya was released on $100,000 bond following a Wednesday appearance in Massachusetts federal court, and is reportedly in plea negotiations with the government, according to a Reuters article citing a statement from his attorney. He has agreed to freeze accounts with $6 million - $8 million in assets and will forfeit 10 vehicles, including three Ferraris and two Porsches, Reuters reported. 
 
Court documents detail how Montoya allegedly told investors that the company managed as much as $5 billion in assets, used proprietary software to forecast movements in equity prices, and was generating positive returns. In reality, he managed less than $100 million, was incurring losses by 2012, and was eventually fabricating account statements. During a June interview with authorities, Montoya reportedly admitted he was taking capital from new investors to make payments to earlier ones. 
 
The case is U.S. v. Montoya, 17-mj-02228, U.S. District Court, District of Massachusetts (Boston).

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