WASHINGTON (Reuters) - Securities and futures regulators charged a Philadelphia-area fund manager with operating a $50 million Ponzi scheme, where he paid off earlier investors with money from later investors, officials said on Thursday.
The Securities and Exchange Commission, which has been criticized for not uncovering Wall Street financier Bernard Madoff's alleged $50 billion fraud, said it obtained an emergency court order freezing Joseph Forte's assets.
The SEC and the Commodity Futures Trading Commission allege that Forte told investors that he would invest funds in an account that would trade in securities and futures contracts, including S&P 500 stock index futures and metals futures.
Forte reported consistent returns to his investors even though he consistently lost money, withdrew millions of dollars in fees for personal use and used investor funds to repay other investors, the regulators said.
According to the government complaints, Forte conducted the Ponzi scheme since at least 1995 and he solicited about $50 million from dozens of individuals and entities to participate in a commodity futures pool.
The SEC complaint said that in late December 2008, Forte admitted to federal authorities that he had been conducting the Ponzi scheme and that he did not have the funds to repay investors.
The CFTC also charged Forte with failing to register as a commodity pool operator, along with sending customers false account statements.
(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)
