Thursday, 27 November 2014
Last updated 1 day ago
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.
Nov 4 2014 | 9:45am ET
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