Double Eagle Hedge Fund Fraudster Pleads Guilty

Mar 26 2010 | 4:05am ET

A Colorado hedge fund fraudster has pleaded guilty to charges that he ripped clients off to the tune of $2.1 million.

Cary Kahn entered his plea to one charge of mail fraud on Wednesday. He admitted that he told clients his Double Eagle Fund was earning double-digits returns, but in fact spent much of the money he raised satisfying his vices.

Kahn told U.S. District Judge Wiley Daniel in Denver that he sent investors phony account statements touting big returns. But he admitted that the fund never had “a legitimate purpose or existence.”

Instead, he spent the money raised from 14 clients between 2002 and last year on alcohol, marijuana and gambling. Asked by the judge what his drink of choice was, Kahn answered, “vodka.” The fraudster said he also spent investor money to pay his own living expenses.

He also admitted that he hid a 2004 action against him by the Securities and Exchange Commission for market manipulation, and that he had never repayed the $12,000 in illicit profits he earned doing so.

“I took advantage of other people,” he said. “I dug a hole. Things were getting worse and I was trying to make them better, and things kind of cannon-balled.”

Kahn faces up to 12-and-a-half years in prison when he is sentenced on June 28.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.