WASHINGTON (Legal Newsline) - The Securities and Exchange Commission on Thursday charged a former Florida broker with defrauding investors in an astrology-based Ponzi scheme.

Gurudeo "Buddy" Persaud told investors he would invest in the debt, stock, futures and real estate markets and get six to 18 percent return on their investments.

Persuad's family, friends and others invested with the firm, White Elephant Trading Company LLC. He allegedly falsely guaranteed their money would be safe, but never did reveal that his trading strategy was based on his belief that markets are affected by gravitational forces.

Persaud chiefly relied on an Internet service that provided directional market forecasts based on lunar cycles and gravitational pull.

The SEC alleges that Persaud's strategy was premised on the idea that gravitational forces affect mass human behavior, and in turn, the stock market. For example, Persaud allegedly believed that when the moon exerts greater gravitational pull on the Earth, people feel dejected and are more inclined to sell securities.

According to the SEC's complaint filed in U.S. District Court for the Middle District of Florida, Persaud used later investors' funds to pay earlier investors. He allegedly lost $400,000 through his trading and diverted at least $415,000 to pay for his personal expenses.

Persaud used some investor money for his personal expenses the SEC said. They also claimed that Persaud created phony account statements to hide his trading losses.

"Persaud preyed on people whotrusted him by promising high and steady returns while hiding hisunconventional trading strategy," said Eric I. Bustillo, director of the SEC's Miami Regional Office. "When Persaud blatantly lied to investors and hid their losses through a Ponzi scheme, he should have known that an SEC enforcementaction was in the stars."

Persaud was a registered representative at a Florida-based broker-dealer but separately operated the now-inactive White Elephant, starting in mid-2007. Persaud allegedly raised more than $1 million from at least 14 investors between July 2007 and January 2010.

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