SEC Charges Malcolm Segal with $15m Ponzi Scheme Selling Fake CDs, Unrealistic Interest Rate

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The SEC filed a complaint against former Aegis Capital broker Malcolm Segal for allegedly operating a five-year Ponzi scheme featuring sales of fraudulent bank CDs to over 50 customers. The SEC charged Segal with redeeming those CDs early in order to perpetuate the Ponzi, claiming Segal orchestrated the fraud through J&M Financial and National CD Sales, which the SEC characterizes as Segal's "alter egos...that existed in name only."

SEC Complaint #15-3668

SEC investigators claim that from 2009 through 2014, Segal made a series of misrepresentations and omissions while offering and selling CDs to brokerage customers and other clients, falsely stating he had access to higher than publicly available interest rates—such as 12% on a particular fabricated CD—and subsequently redeeming most of the CDs that were not fake before their maturation date.

The complaint states Segal used a bank account in the name of J&M Financial, an entity he controlled, to receive money from investors whom Segal convinced to wire the funds for CD purchase and "safe keeping." The SEC also accused Segal of falsely telling investors that his employer Aegis Capital sponsored and oversaw the fraudulent CD program.

SEC staff allege that once Segal received the wired funds in his J&M Financial bank account, he sent an investors a document on National CD Sales letterhead to confirm the deposit, writing, "Depositor has authorized National CD Sales Inc. to purchase the above certificate for their [sic] benefit." Because Segal purportedly never purchased those CDs, the SEC concluded that this statement was materially false.

According to investigators, Segal took proceeds fraudulently obtained from the CDs of later customers to continue the Ponzi by making interest and "redemption" payments to earlier investors.

The complaint also alleges Segal used some proceeds for his personal benefit. The SEC pointed to a Florida condominium purchase as well as vacation and other luxury payments as examples of Segal's misuse of funds.

When at least one investor became suspicious after noticing a large amount of money missing from his account, Segal allegedly created fictitious account statements and other fake documents purporting to show the missing funds had been transferred back into the customer's account.

The SEC alleges Segal gathered over $15 million over the course of his Ponzi scheme and that Aegis Capital discharged the ex-broker for failure to cooperate with an internal investigation into an unauthorized wire transfer claim. Segal's FINRA BrokerCheck report indicates nine disclosures, including several customer disputes alleging misappropriation of funds and unauthorized transfers without clients' knowledge or consent.

If you have invested with former Aegis Capital broker Malcolm Segal or with any financial adviser or firm whose false guarantees, fraud, Ponzi scheme or other severe and potentially criminal misconduct has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

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