Monday, 2 March 2015
Last updated 1 hour ago
Apr 21 2010 | 2:25am ET
Staten Island, N.Y., isn’t home to many hedge funds, and at least one was a fraud, according to authorities.
The president of Gryphon Holdings and four of its employees were arrested yesterday, charged with ripping off customers to the tune of $17.5 million. Among the many lies that Gryphon allegedly told its victims was that it managed a $1.4 billion hedge fund and had received the imprimatur of hedge fund billionaire George Soros.
According to prosecutors and the Securities and Exchange Commission, which filed a parallel civil suit against the five accused, Gryphon garnered clients—many of them elderly—through unsolicited e-mails and telephone calls. Once they had contact information, the firm’s employees allegedly used high-pressure sales tactics and a variety a fraudulent tactics to get between $99 and $250,000 for its investment advice.
In addition to its fictitious hedge fund, authorities say Gryphon had fictitious offices in Manhattan, London and Sydney, Australia—it was actually run from a Staten Island strip mall—and fictitious traders, Michael Warren and Kenneth Maseka, who the SEC say were “figments of” Gryphon president Kenneth Marsh’s imagination.
In addition to Marsh, Baldwin Anderson, Robert Budion, James Levier and Jeanne Lada were charged with conspiracy and wire fraud. Their assets, and those of Gryphon, have also been frozen.
Anderson, Budion and Levier were marketing and sales representatives at the firm, with Lada handling marketing and Gryphon’s Web site.
If convicted, the five face up to 20 years in prison.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…