Hedge Fund Fraudster Trabulse Gets More Than Eight Years In Prison

May 4 2010 | 11:49am ET

A California hedge fund fraudster was sentenced to more than eight years in prison from ripping off investors to the tune of $8.3 million.

Alexander Trabulse pleaded guilty in November to mail fraud. He was accused of using his Fahey Fund as a personal kitty, spending investor money on cars, a home-theater system and an overseas shopping allowance for his ex-wife, all the while boasting to investors about astronomical—and, apparently, fictional—returns of upwards of 200%, according to the Securities and Exchange Commission. He also let his daughter use a debit card linked to one of the fund's bank accounts to buy furniture, airline tickets and to pay for her 2007 honeymoon in Panama.

In 2006, some 165 investors invested $17.6 million in Trabulse’s funds, whose value were inflated to $50 million when, in fact, they were only worth about $12 million.

“Mr. Trabulse lied to fool established investors into keeping their money with him and to trick new investors into investing with him,” prosecutors wrote in a sentencing memorandum. “Those investors were devastated financially and emotionally.”

In addition to his eight-year-and-one-month sentence, U.S. District Judge William Alsup also ordered Trabulse to serve 200 hours of community service and speak to 200 people about his crimes. He was also ordered to pay full restitution.


In Depth

Virtu Celebrates Another Year Without a Single Day of Losses

Feb 26 2015 | 9:05am ET

High-frequency trading firm Virtu Financial Inc. reported another year without a...

Lifestyle

Hedge Fund Manager Out as Minnesota Wild Minority Owner

Feb 25 2015 | 2:45pm ET

New York hedge fund manager Philip Falcone is no longer a minority owner of the...

Guest Contributor

Risk: How To Get In Front Of The Problem

Feb 26 2015 | 9:53am ET

In considering the topic of risk in the hedge fund world, specifically, the oversight...

 

Editor's Note