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Millburn Man, His Company to Pay $1M in Civil Penalties for Defrauding Investors Through Ponzi Scheme

By kcora on
Millburn

The New Jersey Bureau of Securities today ordered Edge Trading, LLC (“Edge Trading”) and its president, Mark J. Moskowitz, to pay a $1 million civil penalty for selling unregistered fraudulent securities and misusing at least $440,000 of investors’ funds for personal expenses, including mortgage payments on his home, entertainment, shopping, and dining out.

The Millburn resident misled eight investors – including three from New Jersey – into buying unregistered securities, primarily in the form of purported limited partnerships in Edge Trading.

In an Order, Amy Kopleton, Acting Chief of the New Jersey Bureau of Securities, found that from March 2012 through April 2016, Moskowitz fraudulently raised at least $798,000 from investors, claiming that the funds would be used in trading strategies that would benefit them. In reality, he used more than half of the money for his and his wife’s personal use, and to pay other investors in a Ponzi scheme. The remaining investor money raised was lost by Moskowitz, predominantly through options trading.

All but two of the eight investors had previously enrolled in online investing and day-trading courses that Moskowitz offered at prices that ranged between $2,500 and $5,450 a course.

In addition to ordering Moskowitz and Edge Trading to pay a civil monetary penalty, the Acting Bureau Chief ordered them to cease and desist from violating the Uniform Securities Law and any related regulations or orders and denied certain exemptions to registration in New Jersey.

In parallel proceedings, Moskowitz today pleaded guilty in federal court to a criminal charge of wire fraud that was filed by the U.S. Attorney’s Office for the District of New Jersey.

Between 1991 and 2007, Moskowitz was registered with the Bureau as an agent of at least four broker-dealers, but has not been registered in any capacity since October 2007. Edge Trading LLC, a Delaware limited liability company founded by Moskowitz in March 2012, has not been in good standing with the Delaware Secretary of State since June 1, 2015.

Moskowitz also transacted business as Edge Trading Partners, L.P., Edge Trading Capital Partners, L.P., Edge Trading LLC, Edge Trading Funds, L.P., Edge Trading Capital Partners Growth and Income Fund, LLC, Edge Trading Partners Growth Fund, L.P., and Edge Trading Growth Fund, LLC, all of which were unformed business entities (the “Unformed Business Entities”).

Moskowitz and Edge Trading also made numerous false and misleading statements and/or omitted material information to investors in connection with the offer and sale of unregistered securities through email communications, private offering memoranda, “trade agreements,” and/or other offering documents and/or account statements. These false and misleading statements included Moskowitz and Edge Trading falsely claiming that the Unformed Business Entities existed when they did not and that investor funds would be invested via trading strategies that were not employed.

Additionally, Moskowitz and Edge Trading failed to disclose to investors that Moskowitz would misuse investor funds for his own personal expenses or to pay investors “returns” via Ponzi scheme payments.

As stated in the Order, of the $798,000 invested in Edge Trading LLC, Moskowitz misused at least $440,000 including:

· Using more than $126,000 in Ponzi scheme payments of purported interest and/or principal payments to investors who purchased unregistered securities;

· Transferring at least $201,890 to his wife’s personal bank account and using the money to pay personal expenses, including mortgage payments on his home;

· Using more than $100,000 for everyday personal expenses like groceries, gas, and restaurant bills, and for other payments to auto body shops, an Atlantic City resort/casino, and retailers such as Best Buy, the Apple Store, and Montblanc.

Moskowitz also misled certain investors by sending fake account statements that falsely represented investors’ purported net return, total value, and percentage of fund ownership in the investment; and by sending them inaccurate tax forms that falsely represented interest and net gains on the investments.

In March 2015, when certain investors began requesting disbursements as permitted in the Offering Document, Moskowitz made false and misleading statements explaining why the requested disbursements could not be provided, including that investors’ money was “tied up” or that the funds had been misallocated to another account through an administrative error. In reality, Moskowitz held insufficient funds in his brokerage and bank accounts to pay the amount requested by investors.

The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. It is critical that investors “Check Before You Invest.”

Investors can obtain information, including the registration status and disciplinary history, of any financial professional doing business to or from New Jersey, by contracting the Bureau toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600, or by visiting the Bureau’s website at www.njsecurities.gov. Investors can also contact the Bureau for assistance or to raise issues or complaints about New Jersey-based financial professionals or investments.