WG Fraudster Settles SEC Case

Jul 30 2010 | 11:52am ET

Just one day after pleading guilty to defrauding investors in his hedge fund, WG Trading’s Paul Greenwood has settled Securities and Exchange Commission charges stemming from the same allegations.

Greenwood, who has agreed to testify against his former partner, Steven Walsh, was barred from future securities law violations and will pay disgorgement and penalties, which have yet to be set. At his plea hearing on Wednesday, Greenwood, who was a principal of hedge fund Westridge Capital Management, admitted to defrauding investors of $545 million in a scam that collected nearly $900 million.

As part of his criminal plea, Greenwood has already agreed to forfeit $331 million and pay an $83.5 million fine.

Greenwood and Walsh were top executives with the New York Islanders hockey team in the 1990s. Shortly after leaving the Islanders, the two men set up WG and began skimming hundreds of millions of dollars from investors for their own personal use, according to prosecutors. The scheme began as early as 1996, with the two using the money to buy, among other things, collectible teddy bears and an apartment for Walsh’s ex-wife, prosecutors said.

Greenwood, who also served as town supervisor of North Salem, N.Y., pleaded guilty to six counts of conspiracy and securities fraud.

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