Massachusetts Files Criminal Charges Against Charges Hedge Fund Manager Over Multi-Million Dollar Ponzi-Like Scam

Prosecutors in Massachusetts have filed charges against hedge fund manager Raymond Montoya for allegedly bilking investors of millions of dollars in a Ponzi-like scam. The criminal charges against him include wire fraud and mail fraud, and they come two months after state regulators brought their own charges against him.

Montoya ran the hedge fund RMA Strategic Opportunity Fund LLC. He is accused of misusing millions of dollars of investors’ funds to pay back earlier investors, as well as to pay for his son’s mortgage along with luxury items and expenses. The criminal complaint stated that Montoya told investors that RMA held about $4B in assets under management and employed proprietary software to predict stock price changes.

In reality, contend prosecutors, the hedge fund manager oversaw less than $100M and invested just part of victim’s funds.

According to the criminal complaint, during an interview with authorities Montoya admitted that by 2015, the fund’s losses were significant yet he continued to tell investors that they were “making modest” returns. The hedge fund manager also admitted to using investor money to repay investors and fund personal expenses. Meantime, he allegedly created bogus account statements.

The New York Post, which reported on the criminal charges, said that among Montoya’s alleged victims was a group of relatives. One of them, 63-year-old Cathy Roth, claims that Montoya bilked her of up to $6.6M and she was forced to give up her Newport Beach, CA apartment. She is now considering trying to get a job as a barista at Starbucks so she can receive health insurance.

One of Roth’s sisters, a retired schoolteacher, claims that because of Montaya she lost more than $1M. Another sister, who is married, may have lost millions of dollars. Both she and her husband are plastic surgeons. Their investment losses likely means that they may not be able to retire for a long time even though they are already in their sixties.

Montoya has agreed to freeze accounts holding $6M to $8M in assets, as well as forfeit 10 cars, including two Porsches and three Ferraris.

Ponzi Fraud
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Hedge fund manager charged for scamming investors out of millions, New York Post, August 5, 2017

Prosecutors Say Boston Hedge Fund’s Manager Defrauded Investors, NY Times, August 2, 2017