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

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Provio Brings Anonymous Interviewing to Wall Street

Aug 12 2015 | 2:44pm ET

Taking a page from social networking and dating websites, a startup technology company...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note