The Securities and Exchange Commission charged Gurudeo "Buddy" Persaud of Orlando, an ex-broker with defrauding investors through an astrology-based Ponzi scheme that bilked clients out of nearly $1 million. In a plea agreement, Persaud was sentenced to prison this week for mail fraud and ordered to pay $948,340.00 in restitution.
Persaud pitched investors a "safe" and guaranteed return of between 6% and 18% by investing in stocks, futures, real estate markets and notes based on lunar cycles and the gravitational pull between the moon and the Earth. He believed that the gravitational pull between the moon and Earth affects human behavior, which in turn impacts the stock markets. For example, Persaud believed that when the moon is positioned in a manner that exerts a greater gravitational pull on human beings, they feel down and are therefore more inclined to sell securities in the markets.
There is science to back this up although the interpretation of lunar cycles may not apply to behavior buying and selling market instruments. The article leads you to believe that the crime was the lunar cycle investing until you read further into the story:
The SEC's investigation revealed that from no later than July 2007 until at least January 2011 Persaud raised more than $1 million from investors but invested only a portion, instead using the money from later investors to pay earlier investors in a classic Ponzi scheme. He also used nearly $415,000 of the money to support his and his family members' lifestyles. Persaud issued phony statements to conceal the fraud from investors.The celestial trading scheme was apparently unsuccessful. On the investments that Persaud did execute, he lost $400,000 -- with net losses on trades from the very first month he received investor contributions.
The REAL crime is the Ponzi portion of the scheme - that he paid old investors with money from new investors. The fact that he lost money investing according to lunar cycles is NOT illegal per sey. But the article leads you to believe that that is part of the illegal activity. Bad investing is bad investng whether it is through financial astrology, moon cycles, bad financial research or a bust market. Ponzi schemes are crimes that have nothing to do with bad financial picks or busts. The resulting press from all of this casts financial astrology as part of a ponzi crime. This just isn't true. Just wanted to clear that up.
You can read the full story here.