The Securities and Exchange Commission has charged Gurudeo Persaud, who was a registered representative at a Florida-based broker-dealer and also ran a firm called White Elephant Trading Company, with defrauding investors in a Ponzi scheme.

According to the SEC’s complaint, Persaud lost $400,000 of investor funds and diverted at least $415,000 to pay for personal expenses, creating false statements to hide trading losses and “give investors a false sense of security.”

In total, he raised over $1 million from around 14 investors between July 2007 and January 2010, the SEC says, funneling off money from the first month and using new investor cash to pay other investors. He marketed his company to friends, family and other investors, promising returns of 6 to 18 per cent.

In a bizarre twist, he based his strategy on gravitational forces, according to the SEC.

“Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy,” said Eric Bustillo, director of the SEC’s Miami regional office.

The SEC’s complaint seeks disgorgement of ill-gotten gains, financial penalties, and injunctive relief against Persaud to enjoin him from future violations of the federal securities laws.