Hedge Fund Settles Westgate Ponzi Scheme Lawsuit

Nov 29 2010 | 10:11am ET

Hedge fund Mountain Capital Management—and 44 other investors—have settled with the court-appointed receiver in the Westgate Capital Management Ponzi scheme case.

Lee Richards had filed clawback lawsuits against the Woodcliff Lake, N.J.-based hedge fund and other investors, demanding they return the fictitious profits paid out by Westgate. Richards had also accused Mountain founder Neil Monteleone of learning that fellow hedge fund Westgate was a fraud three years before it collapsed, and doing nothing about it.

Mountain denied those allegations; its lawyer, Anthony Paccione, said the firm settled as a "necessary step for all parties to try to move forward.

Mountain will return $8.88 million—the bulk of the settlements reached by Richards. Paccione said that accounted for "all of the fictitious profits that [Monteleone's] funds received over a number of years. It is important to note that my client had no knowledge of the fraud and was defrauded like all of the other victims."

The 45 settlements netted a total of $9.99 million. Richards said he has now recovered 77% of the phony profits he was seeking, adding that "a number" of clawback cases remain outstanding.

Westgate founder James Nicholson was sentenced to 40 years in prison last month for running the $140 million scam. He pleaded guilty in December, a year after his Ponzi scheme fell apart in the wake of the Lehman Brothers collapse.


In Depth

Israeli Hedge Fund Harnesses Big Data

Jul 28 2014 | 8:10am ET

Apica Green is a multi-million dollar Israeli hedge fund that is based in Tel Aviv...

Lifestyle

David Yarrow On Growing His Hedge Fund And Shooting The Animals And People Of Africa - As A Photographer

Jul 23 2014 | 6:44am ET

While he’s always been a photographer, recent expeditions to Iceland, Ethiopia...

Guest Contributor

The Truth About Track Record Portability

Jul 24 2014 | 5:55am ET

The number of private funds converting to mutual funds has increased significantly...

 

Sponsored Content

    Northern Trust Helps Hedge Funds Navigate Derivatives Regulations

    Jul 8 2014 | 10:48am ET

    The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…

Publisher's Note