An Encinitas resident who defrauded investors out of $4.9 million by operating a Ponzi scheme out of his hedge fund pleaded guilty today to a federal wire fraud charge.
John Clement, 65, operated the scheme by falsely representing to investors that Edgefund Capital was a successful hedge fund that specialized in trading stocks on a daily basis, according to the plea agreement and other court records.
Among other false representations, the defendant claimed that investors would make between 1.5 and 2 percent per month with little or no risk involved. In order to induce investors not to withdraw their funds or to send additional money to Edgefund, Clement issued false account statements indicating investors were routinely earning substantial positive returns when they were not earning any returns, as he was using their money to pay personal expenses, according to prosecutors.
Clement is scheduled to be sentenced Dec. 20 by U.S. District Judge Irma Gonzalez.
City News Service contributed to this story.