The Securities and Exchange Commission has charged a Philadelphia-area investment fund manager and his firm for conducting a multi-million dollar Ponzi scheme, and has obtained an emergency court order freezing their assets.
According to the SEC's complaint, Joseph S. Forte of Broomall, Pa., fraudulently obtained an estimated $50 million from as many as 80 investors through the sale of securities in the form of limited partnership interests in his firm, Joseph Forte, L.P. The SEC alleges that Forte told investors that he would invest the funds in an account that would trade in securities futures contracts, including S&P 500 stock index futures. According to the complaint, despite the impressive and consistent returns he reported to investors, Forte consistently lost money in the limited trading that he did, withdrew millions of dollars in so-called fees for his personal use based on the falsely inflated value of Forte LP, and used investor funds to repay other investors.
This is our favorite part though:
"Forte engaged in lies, deception and rapacious behavior at the expense of innocent investors, many of whom considered themselves his friends and close acquaintances."
Oh, the humanity!
Buffett really wasn't kidding with the swimming naked / tide metaphor.
SEC Charges Philadelphia-Area Fund Manger For Multi-Million Dollar Ponzi Scheme [StreetInsider]