SEC Slams Hedge Funds For Misleading Investors, Ponzi Payments

Dec 22 2010 | 11:38am ET

The Securities and Exchange Commission has sued seven people for defrauding investors of some $34 million.

The four managing members of two hedge funds, and three principals of those funds’ investment adviser, have been accused of misleading investors about those funds’ strategy and of making at least $6 million in Ponzi scheme payments. The Arcanum Equity Fund, Vestium Equity Fund and Imperium Investment Advisors lost at least $8.1 million on illiquid investments and loans to affiliates.

One of the seven charges, Richard Mittasch of Long Island, is also accused of losing $6 million raised from another 60 investors for his Triton Capital Partners in the $413 million Ponzi scheme run by Nicholas Cosmo.

According to the SEC, the Imperium scam ran for two years from April 2008. The firm and its principals and fund managers allegedly assured investors they would put their money into conservative fixed-income and commodities strategies. Instead, they are accused of gambling on private investments, paying themselves more than $1.3 million for the trouble “based on inflated asset values and fictitious profits.”

One of the seven has already settled the charges, agreeing to pay more than $1.3 million, while another of the defendants has partially settled.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Often seen as a passion project, or part of a philanthropic venture, rare and fine stringed instruments offer an exciting option to diversify one’s investment portfolio while providing an opportunity for an exceptional long-term investment.