Tuesday, 30 August 2016
Last updated 1 hour ago
Sep 14 2010 | 5:44am ET
Colorado regulators have accused hedge fund manager Mark Yost of defrauding investors of $25 million.
The state’s Securities Division sued Yost and his Yost Co., alleging that he spent client funds on himself and lied about his Yost Partnership fund’s returns. A federal judge in Denver has frozen Yost’s assets and those of his firm, and imposed a temporary ban on securities trading.
“He misrepresented to investors the amount in the fund and their returns, thereby lulling them into thinking their funds were safe and secure and making money,” Gerald Rome, deputy securities commissioner, said.
According to the lawsuit, Yost inflated the value of both the fund and its returns in order to reap larger fees. He allegedly didn’t stop there, using investor money outright on personal expenses, including paying the insurance premiums on his airplane. Yost also allegedly used his post as chairman of Flatirons Bank to run something of a Ponzi scheme to repay several investors who sought to redeem their investments.
“This was an isolated incident that does not affect any existing customer loans or deposits,” Flatirons President Kyle Heckman said. “It appears that Mr. Yost's actions were driven by his activities in other investment partnerships and were otherwise unrelated to the business of Flatirons Bank.”
According to Colorado, some 50 investors, many from Yost’s hometown of Fremont, Neb., lost $25 million.