Hedge fund manager accused of fraud

A Boston hedge fund manager is accused of bilking investors out of tens of millions of dollars, promising a top secret algorithm that would bring enormous returns, but instead used investor money to pay other investors and himself, paying off a $1 million mortgage for his son and buying luxury cars, authorities said.

Raymond Montoya, 69, of Boston, allegedly took $30 million from investors, at least some of whom were strangers, state and federal authorities said. Montoya allegedly told prospective investors his secret method had seen an average annual return of more than 134 percent between January 2008 and October 2016, and even saw a 10.2 percent return in 2008, when the S&P 500 fell by nearly 40 percent.

“He played himself as somebody who was a very successful person, which he was not,” Secretary of State William Galvin said. “In a relatively short period of time, he took a lot of money.”

The Massachusetts Securities Division, which Galvin oversees, began investigating Montoya and his firm Resource Managed Assets, then referred the case to federal prosecutors. Montoya surrendered Wednesday to face federal charges of wire fraud and mail fraud.

According to Galvin’s office, Montoya used investor money to pay off a mortgage of more than $1 million for a home in Illinois for his son, and to pay for tens of thousands of dollars in credit card bills and payments for luxury vehicles worth about $1 million.

Montoya’s lawyer, Christopher Bruno, said his client has been talking to prosecutors, seeking a settlement.

“Mr. Montoya continues to cooperate with law enforcement authorities; his efforts are focused on preserving assets for return to investors,” Bruno said. “We’re hopeful to resolve this case short of trial.”

NO SECRET SAUCE: Raymond Montoya, who is accused of bilking investors of several million dollars, leaves federal court in Boston Wednesday. REUTERS PHOTO BY NATE RAYMOND