Joseph Forte raised funds from as many as 80 clients and withdrew millions of dollars in fees while falsely claiming to deliver “outrageous returns,”

Joseph Forte raised funds from as many as 80 clients and withdrew millions of dollars in fees while falsely claiming to deliver “outrageous returns,” the Securities and Exchange Commission said in a statement today. Instead, his “limited” trades in the past 10 years generated one annual profit, which was less than $22,000, according to the agency’s lawsuit filed in federal court in Philadelphia. U.S. regulators sued a Philadelphia- area investment-fund manager and his firm, claiming he has been running a $50 million Ponzi scheme since at least 1995 that bilked charities and schools. “Forte engaged in lies, deception and rapacious behavior at the expense of innocent investors, many of whom considered themselves his friends and close acquaintances,” said Daniel Hawke, head of the SEC’s Philadelphia office. Clients include non-profit groups, chartable foundations, and schools, he said.

Bernard Madoff’s alleged $50 billion Ponzi fraud is spurring investors and regulators to scrutinize money managers who claim to deliver consistently strong profits. Unable to raise money to maintain payouts, Forte approached federal authorities in late December and admitted to the scam, Hawke said.

Increasingly, “people are asking questions and challenging assumptions,” Hawke said. “He recognized that his inability to raise additional funds would result in the scheme collapsing, so he chose to come in and confess.” Forte, a resident of Broomall, Pennsylvania, didn’t immediately return calls to his home and mobile phone. He and his company, Joseph Forte LP, consented to a court order freezing assets, without admitting or denying allegations in the SEC’s complaint. He also was sued by the Commodity Futures Trading Commission. Federal investigators are probing other money managers suspected of running Ponzi schemes, in which early investors are typically paid profits from later participants, two people with knowledge of the inquiries said last week. The SEC said Dec. 30 that it halted what the agency described as a $23 million scam targeting Haitian-Americans, claiming the Florida-based operators sought more investors as recently as last month. Madoff, 70, was charged Dec. 11 at federal court in Manhattan with securities fraud after allegedly telling his sons his New York-based investment advisory business had been “one big lie” and that he was “finished.” The SEC, which sued him, is seeking to unravel the extent of the losses and recoup money for investors.