WASHINGTON (HedgeWorld.com)–The Securities and Exchange Commission settled its civil action against David M. Mobley, founder of the fictitious but aptly named “Predator System” of index trading.
Pending the approval of the federal district court, the settlement enjoins Mr. Mobley from violating the antifraud provisions of the federal securities laws and bars him permanently from the investment advisory business. It also orders him to disgorge US$48.96 million, but the SEC’s statement May 20 observed that this obligation has been satisfied by his previous disgorgement of that amount and other assets to the court-appointed receiver, Otto Obermaier.
Beginning in 1992 and continuing into 2000, Mr. Mobley told potential investors that he would invest their capital in hedge funds that produced average annual returns of 50%, employing what he called his “Predator System” of index trading. He raised more than US$140 million from 170 investors in this way. He was not a licensed stockbroker, and he engaged in no index trading. He spent their money on a lavish lifestyle, paying the earlier investors with the money raised from later investors, in classic pyramid style.
In February 2000, at the SEC’s request, the U.S. District Court for the District of Florida froze his assets and those of the suspect entities: Maricopa Investment Fund Ltd., Maricopa Index Hedge Fund Ltd., Maricopa Financial Corp. and Ensign Trading Corp.
Criminal charges followed and, on July 20, 2001, Mr. Mobley pleaded guilty to mail fraud, wire fraud, money laundering and tax evasion.
With their money, he bought himself a US$400,000 home in Naples, Fla., aUS$1 million vacant lot in the Quail West section of Naples and a US$40,000 diamond ring, prosecutors said at the time of his plea Previous HedgeWorld Story.
Mr. Mobley is currently in prison, serving his sentence of 17.5 years.