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June 08, 2017 at 03:51 PM
Commonwealth Secretary William F. Galvin, Massachusetts’ top securities regulator, charged Raymond K. Montoya of Allston with defrauding investors out of millions of dollars over the past decade.
“Montoya has used this money for his own personal benefit and that of his immediate family, to trade with limited success, and to make Ponzi-like payments to other investors,” the administrative complaint stated.
In the past three years, his RMA Fund has taken in more than $30 million, but less than $16 million was ever transferred to any brokerage account.
RMA claimed its net asset value exceeded $3.9 billion in 2011 and $5 billion in 2015. It made assertions to investors that it generated positive returns over 10 years outperforming the S&P by 134%. It stated that its assets were traded in brokerage accounts held with JPMorgan and later testified that it had $20 million in accounts at E*Trade. The complaint alleges that these were all false statements.
“This egregious fraud by an unregistered individual should serve as a warning to investors to have caution when investing and to not be enticed by get-rich opportunities,” Galvin said in a statement. “And inflated statements of investment returns should be an immediate red flag.”
Also named in the complaint were Research Magnate Advisors and Resource Managed Assets, both Delaware limited liability companies formed by Montoya, sharing a Boston office.
“For the past three years, Montoya and his associated entities have relied on an exemption from registration that all but removed them from regulatory oversight,” the complaint charged. “In that time Montoya has enticed investors with misleading materials and inflated rates of return in order to perpetrate his fraudulent scheme in violation of the Massachusetts Uniform Securities Act.”
In the past three months alone, Montoya has taken in more than $1.8 million of investors’ money, the complaint notes. According to the complaint, Montoya used investor money “as a personal slush fund” to pay off his son’s mortgage of more than $1 million, and to make $1.3 million in personal payouts and salaries to family members “for vaguely defined services.”
The complaint calls for an immediate cease and desist order against the respondents, as well as barring them from the securities business in the state. They would be required to disgorge all profits and remuneration from their alleged wrongdoing and to pay a fine.
Advisor to Pay $1.7 Million for Overcharging Clients, Stealing Assets
Marc D. Broidy and Broidy Wealth Advisors LLC were ordered to pay over $1.7 million for defrauding clients and stealing assets, according to the final consent judgment.
Judge Eric N. Vitaliano of the U.S. District Court for the Eastern District of New York entered a final consent judgment against Broidy and BWA, enjoining them from violating antifraud provisions of the federal securities law and ordering them, jointly and severally, to pay $1.7 million in disgorgement.
The disgorgement was partially satisfied by Broidy’s payment of $25,000 directly to a former client, and the balance deemed satisfied by the entry of an order of restitution in the parallel criminal matter, United States v. Marc Broidy.
Additionally, the Securities and Exchange Commission barred Broidy from the securities industry.
The SEC charged Broidy and BWA with fraudulently overbilling clients and stealing assets from their trusts to pay such personal expenses as his home mortgage, overseas trips and leases on two Mercedes-Benz vehicles.
The SEC alleged that Broidy billed clients approximately $643,000 in excess fees and covered it up by altering the amount of management fees recorded on forms issued by brokerage firms before sending the forms to his clients. According to the SEC, Broidy fraudulently obtained additional funds to pay his personal expenses by misappropriating approximately $865,000 in assets from clients’ trusts for which he was trustee, and that Broidy also defrauded advisory clients about some investments they made in privately held companies when he did not inform them he was affiliated with those companies.
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