Massachusetts Secretary of the Commonwealth William Galvin charged Stephen S. Eubanks and his company with engaging in a Ponzi scheme that took at least $529,000 from investors, according to the complaint.
Eubanks, of Hingham, Massachusetts, acted as an unregistered investment adviser and sold unregistered securities, the complaint also charges.
Since October 2011, Eubanks presented himself as a successful hedge fund manager, operating a limited liability company Eubiquity Capital. He promised to invest in stocks, options and other securities, but he used $145,000 to finance his lifestyle, and another $140,000 to repay earlier investors, calling that money return on their investment, the complaint outlined.
"This operation, almost a textbook Ponzi scheme, took advantage of the trust of friends and family, and my office will move swiftly to put an end to it," Galvin said in a statement. "It serves as a reminder that any investor should check on the credentials of anyone offering investment opportunities. In this instance, the man had none."
What money Eubanks did invest, he lost, according to the complaint.
"Over the past six months alone, Eubanks has solicited at least $75,000 from new investors in an attempt to prevent his Ponzi scheme from collapsing," the complaint states.
However, according to the complaint, none of that money was invested, rather used for personal expenses or to pay earlier investors.
"Eubanks' scheme preys upon the trust placed in him by his investors, most of whom consider Eubanks to be a close and trusted friend," the complaint said.
Known victims included friends, neighbors, a college roommate, and the elderly father of a college fraternity brother.
The complaint seeks to permanently bar Eubanks and his company from the securities business in Massachusetts, and calls for restitution to the investors for losses attributable to the alleged wrongdoing. It also calls for a cease and desist order, along with censure and an administrative fine.
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