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.

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