Less than a month after Bernard Madoff's alleged $50 billion Ponzi scheme came to light, the Securities and Exchange Commission on Thursday charged a Philadelphia-area investment fund manager and his firm with running a $50 million Ponzi scheme of his own.

The fund manager, Joseph Forte of Broomall, Pa, allegedly committed fraud by obtaining an estimated $50 million from as many as 80 investors through the sale through the sale of ownership stakes in his firm.

According to the SEC, Forte, 53, admitted to the scheme in December 2008 but said he does not have funds to repay investors. It’s unclear if criminal charges have been filed.

"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 M. Hawke, director of the SEC’s Philadelphia Regional Office. “Using other people’s money, Forte promised and reported outrageous returns over more than a 10-year period, and because of his relationships with investors was able to lull them into trusting him with their funds.”

A U.S. District judge for the Eastern District of Pennsylvania granted a preliminary injunction on Wednesday to freeze the assets, compel an accounting and impose "other emergency relief," the SEC said. Without admitting or denying the allegations in the SEC's complaint, Forte and his firm consented to the actions. 

The SEC is seeking the release of Forte’s “ill-gotten gains” plus pre-judgment gains, financial penalties and permanent injunctions barring future violations of anti-fraud provisions in federal securities laws.

Ponzi schemes, which typically offer unusually high returns, defraud investors by paying early investors with the funds from new investors.

The SEC action comes after the government charged Madoff, a prominent Wall Street veteran, with running a $50 billion Ponzi scheme.

Similar to the Madoff scandal, the SEC said at least one charitable foundation invested with Forte’s firm.

Also like the alleged Madoff scheme, Forte’s alleged fraud began to unravel during the market downturn when his trading account was virtually depleted and he could no longer meet withdrawal requests, the SEC said. Still, Forte solicited money from two close friends to meet the requests, the SEC said.

“Finally, when the defendants could no longer obtain investments at a rate sufficient to honor redemption requests, Forte confessed to the fraud to federal authorities,” the SEC complaint says.

Forte allegedly told investors he had a profitable business in trading S&P 500 future contracts. The SEC said neither Forte nor his firm have ever been registered with the agency in any capacity.

Forte admitted to misrepresenting and falsifying his firm’s trading performance from the first quarter of 1995 through September 2008. While Forte reported annual returns in the range of 18.5% to 37.96%, his firm’s trading account at MF Global (MF) had net trading losses of approximately $3.3 million, the SEC said.

The SEC claims Forte lied about the value of his firm’s partnership portfolio as he allegedly told investors it was worth $140 million when in fact the trading account had a balance of just $146,814. Forte withdrew $10 million to $12 million in fees for his personal use based on the "falsely inflated" value of his firm, Forte LP, and then used $15 million to $20 million of investor funds to repay other investors, the SEC alleged.

While Forte and his firm said they raised approximately $50 million from investors for the purpose of trading, he only deposited $25.8 million into the trading account between January 1998 and October 2008, the SEC said. During the same time period, Forte allegedly withdrew $23.1 million.