SEC Adds To Allegations Against Conn. Hedge Fund Fraudster

Mar 9 2011 | 1:37pm ET

On the same day he pleaded guilty to defrauding investors in his hedge fund, Francisco Illarramendi got some more good news: The Securities and Exchange Commission filed new charges against him.

Illarramendi, who faces up to 70 years in prison on the wire fraud, securities fraud, investment adviser fraud and conspiracy fraud convictions, now faces civil allegations that he ran a Ponzi scheme totaling in the hundreds of millions of dollars.

The SEC, which in January sued Illarramendi and his Michael Kenwood Group for allegedly misappropriating $53 million in investor assets, accuses Illarramendi of misleading investors about the value of his hedge funds. The Connecticut man claimed to manage $540 million, but when the SEC began looking into him and the funds, he allegedly had two Venezuelan men doctor up a letter from an accountant attesting to the existence of $275 million that did not, in fact, exist.

"Illarramendi knew the SEC was on to his scheme and compounded his fraud by attempting to mislead the Commission's staff," David Bergers, head of the SEC's Boston office, said.

Prosecutors have charged the two Venezuelans, Juan Carlos Guillen Zerpa and Juan Carlos Horna Napolitano, with conspiracy to obstruct an SEC probe.


In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...