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Day Trader Inspired by ‘Holy Spirit’ Accused of Bilking Church Members

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Massachusetts officials have charged Charles L. Erickson with taking $3.5 million from at least 25 investors, about a third of whom he had met at a church in Ashland, where he was a church elder. 

“Erickson believed that the ‘Holy Spirit’ had given him a proprietary system for day trading a particularly volatile type of futures contract,’’ said the state’s administrative complaint. The accusations were made Tuesday, just two days after churches worldwide celebrated Trinity Sunday, which recognizes the doctrine of one God in three persons (Father, Son and Holy Spirit).

The document also explained that the alleged fraudster “pooled investor funds into online brokerage accounts and began trading pursuant to his purportedly divine system.”

Erickson started the scheme in 2010 and promised investors returns of 4% a month, or 96% over two years. He used spreadsheets of profitable trading results to lure parishioners and others into giving him money over a period of about four years.

“In reality, however, Erickson’s spreadsheets were nothing more than promotional tools, showing only hypothetical profits and losses,” the complaint said. “Erickson never disclosed actual profits or losses to his investors.”

Erickson admitted to state authorities that when his system was unprofitable, he would pay monthly returns to investors with capital reserves deposited by later investors.

The regulators found that $1.5 million of the $2.8 million Erickson raised over a two-year span was transferred to his brokerage accounts, while remaining funds were kept in his checking account.

“Ponzi schemes are insidious tricks on investors because they seem to work, but inevitably collapse,” said Secretary of the Commonwealth William Galvin, in a statement, “It is especially distressing when it occurs in the context of affinity fraud where investors are victimized by misplaced trust.”

Long-Term Plan

According to the complaint, Erickson began looking for ways to supplement his retirement income in 2008. He invested his own money in E-Mini Russell 2000 futures contracts in 2008 and then two years later started taking funds from others.

He started losing money in 2013, but didn’t tell investors until late 2014.

The state’s Securities Division says it is seeking “a permanent cease-and-desist order, a censure, an accounting of all losses attributable to the alleged wrongdoing, compensation to investors for losses, and a permanent ban from the securities business in Massachusetts.”

Erickson is currently not registered with the Securities Division, though he was formerly licensed as a registered representative of the Paul Revere Life Insurance Co.

— Check out SEC Charges Advisor With Bilking Retired Teachers, Police Chief, Pastor on ThinkAdvisor.