Raymond K. Montoya, Multi-Million Dollar Ponzi Scheme, Massachusetts 2017

BOSTON – In a shocking turn of events, a Boston area hedge fund manager has pleaded guilty to operating a multi-million dollar Ponzi scheme. Raymond K. Montoya, 70, of Allston, was charged with three counts of wire fraud, five counts of mail fraud, and two counts of conducting an unlawful monetary transaction.

Montoya was arrested in August 2017, and his sentencing is scheduled for Jan. 22, 2019. The charges of mail fraud and wire fraud carry a sentence of no greater than 20 years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or gross loss from the offense, restitution and forfeiture. The charge of conducting unlawful monetary transactions provides for a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000, or twice the value of the criminally derived property.

According to court documents, Montoya ran a pooled investment hedge fund in Boston called RMA Strategic Opportunity Fund, LLC. He falsely told his investors—including his family, friends, and acquaintances who resided in Massachusetts, Ohio, and California—that the fund was earning substantial returns, when in fact, by 2014, the RMA Fund was sustaining substantial losses. The investors transferred millions of dollars of their personal savings and 401(k) retirement plans to Montoya and the RMA Fund.

Montoya used the diverted money for personal expenses such as luxury vehicles and the mortgage on his son’s residence. He was previously charged with securities fraud in a civil complaint by the Massachusetts Securities Division.

The investigation was conducted by the Federal Bureau of Investigation, Boston Field Division, and the Internal Revenue Service’s Criminal Investigation in Boston, with valuable assistance from the Massachusetts Securities Division. Assistant U.S. Attorney Neil J. Gallagher Jr. of Lelling’s Securities and Financial Fraud Unit is prosecuting the case.

Montoya’s crimes have left a trail of financial devastation in his wake. His victims invested millions of dollars in his fund, only to have their money diverted for his personal use. The sentencing of Montoya is scheduled for Jan. 22, 2019, and it remains to be seen how he will be punished for his crimes.

Montoya’s case serves as a reminder of the importance of due diligence when investing in hedge funds. Investors must be cautious of unscrupulous managers who use high-pressure tactics to convince them to invest in their funds.