Conn. Hedge Fund Manager Pleads Guilty To Fraud

Mar 8 2011 | 1:46pm ET

Federal prosecutors yesterday won a hedge fund manager's guilty pleas to fraud charges.

No, not that hedge fund manager.

Francisco Illarramendi pleaded guilty to wire fraud, securities fraud, investment adviser fraud and conspiracy to obstruct justice in Bridgeport, Conn., federal court, U.S. Attorney David Fein said. Fein added that he has charged two alleged co-conspirators, Juan Carlos Guillen Zerpa and Juan Carlos Horna Napolitano, with conspiracy to obstruct a Securities and Exchange Commission probe into Illarramendi's Michael Kenwood Group hedge fund.

Both men were arrested yesterday and are being held without bail. According to Fein, the two men, both Venezuelans, provided a bogus letter from an accountant in that country verifying $275 million in imaginary assets. Illarramendia allegedly paid them more than $3 million for the letter.

According to prosecutors, Illarramendi ran a Ponzi scheme through his $540 million Short Term Liquidity Fund beginning in February 2006. He also allegedly stole some $53 million for personal expenses and for other businesses he controlled.

"We believe this case represents the largest white-collar prosecution ever brought by this office," Fein said in a statement.

Illarramendi was sued by the SEC in January.

Illarramendi faces up to 70 years in prison. His alleged co-conspirators face 25 years each.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.