‘Phantom’ Hedge Fund Manager Arrested

Apr 21 2010 | 2:21am ET

A New Jersey hedge fund manager has been arrested for allegedly defrauding investors of $1.6 million.

Robert Sucarato’s New York Financial Co. was little more than a pack of lies, prosecutors say. He was arrested on Friday and charged with wire fraud and fraud by a commodity pool operator. He remains jailed pending a Friday bail hearing.

Authorities say that Robert Sucarato lied about just about everything to investors: how much money he was managing, his returns, his education and his firm’s offices. All told, he attracted some $1.7 million to his New York Financial Co., stealing some $494,000, losing $850,000 and using the rest to prop up the Ponzi scheme, according to the Securities and Exchange Commission, which sued him last year.

At a time when Sucarato was claiming to manage $7.2 billion, his brokerage accounts had just $110,000 in them, according to the SEC complaint. He also allegedly forged accounting statements to show more than $600 million in assets in 2004 and more than $800 million in 2005.

As befits any would-be Ponzi schemer, Sucarato also lied about NYFC’s returns, the SEC said, claiming they ranged from 26.5% to 48.2%. In fact, the SEC said, “Sucarato consistently experienced net trading losses, which totaled approximately $850,000.”

The regulator said he also lied about his education, claiming to have graduated from New York University. He also “embellished biographies” of the firm’s other executives “to create an illusion of stability, longevity and expertise,” the SEC alleges, and claimed “that over 20 experienced traders and additional support staff worked for the company.” None did, the SEC said. Nor did the firm actually have the New York and Chicago offices it claimed, only “virtual” offices with mailboxes and shared receptionists.

If convicted, Sucarato could face up to 20 years in prison.


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