Wednesday, 28 January 2015
Last updated 11 hours ago
Dec 7 2010 | 6:21pm ET
They may not have known it, but the hedge fund fraudsters and others snared by a variety of federal agencies for various financial misdeeds were part of something larger: Operation Broken Trust.
The sweep, which ran from August through last month, netted some 343 criminal defendants and 189 civil defendants who, together, are accused of ripping people off to the tune of more than $8 billion. The already-completed operation was announced yesterday by U.S. Attorney General Eric Holder.
"With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Holder. "To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan—we will use every tool at our disposal to find you, to stop you, and to bring you to justice."
Among those brought to justice were seven alleged co-conspirators of Ponzi schemer Thomas Petters, including Gregory Bell, the founder of hedge fund Lancelot Investment Management, and its vice president of finance and accounting, Harold Katz. According to the Securities and Exchange Commission, Lancelot poured almost all of the $2 billion it raised into Petters' scam and later helped him cover it up through a series of bogus payments.
Also caught breaking trust were hedge fund managers Bruce Prevost and David Harrold. And like the Lanceloters, Prevost and Harrold stand accused of funneling more than a billion dollars to Petters.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…