Bucks man charged with $1.8 million swindle

A Bucks County man was charged Wednesday with swindling six people out of more than $1.8 million through an investment scheme that promised unusually high rates of return, the U.S. Attorney's Office in Philadelphia said.

Malcolm Segal, 69, of Langhorne, worked as a financial adviser for Aegis Capital in New York and often sold certificates of deposit, low-risk investments that yield interest rates slightly higher than those of a savings account.

Segal claimed to his victims that he was selling CDs that paid up to a 12 percent annual interest rate for a two-year investment of $100,000, according to the federal indictment. But no such CDs existed, court records stated, and Segal spent the money on himself or to pay off earlier investors in what allegedly was a $15 million Ponzi scheme.

A 12 percent rate is unheard of these days, according to the website of the Federal Deposit Insurance Corporation (FDIC), an independent agency that monitors the U.S. financial system. The national average return rate is currently 0.37 percent for a two-year CD of $100,000 or more, according to the FDIC.

"With an average CD rate of under 1 percent, someone who is offering a CD at a guaranteed rate of 12 percent is offering a product that is too good to be true," added Louis D. Lappen, the first assistant U.S. attorney in Philadelphia.

Toward the end of Segal's scheme, which lasted from 2011 to 2014, he stole an additional $1.2 million directly from clients who had accounts with Aegis, transferring money off their balance sheets to his own, the indictment alleges.

The Securities and Exchange Commission, which filed its own charges against Segal on Wednesday, said Segal even forged the signature of a client's dead wife to siphon money into his personal account.

By that point, Segal was desperate to keep his scheme afloat so he could pay off early investors, the SEC said. But the alleged scam collapsed last year. All told, he had raised a total of $15 million from about 50 people, the SEC said.

"Segal duped investors by pretending to sell them safe investments while stealing their money for his own benefit and making Ponzi payments to earlier investors," Sharon B. Binger, director of the SEC's Philadelphia regional office, said in a news release. "Segal put his own greed above his obligations to customers and violated the law."

Nicholas C. Harbist, Segal's Princeton-based attorney, declined to comment.