Monday, 26 January 2015
Last updated 2 days ago
Mar 25 2011 | 12:42pm ET
A Connecticut hedge fund has been accused of serving as a feeder fund for the Thomas Petters Ponzi scheme, helping the fraudster conceal his $3.5 billion scam.
Acorn Capital Group and founder Marlon Quan raised more than $459 million from 2001 through 2008, with most of it going to Petters-controlled companies and investment funds, the Securities and Exchange Commission said. Petters was convicted to running a Ponzi scheme in 2009 and is serving a 50-year sentence.
According to the SEC, Quan knew what Petters was up to while funneling "hundreds of millions of dollars" to him "and his notorious Ponzi scheme." The regulator said that Quan arranged some $187 million in so-called "round-trip" transactions, in which Petters wired money to Acorn, which then wired it straight back, to help Petters hide the scam.
Another Petters-linked hedge fund, Lancelot Investment Management, also used round-trip transactions to give the impression that Petters was paying its bills. Two of that hedge fund's executives pleaded guilty to fraud charges and were sentenced to prison for their roles in the scam.
Quan, Acorn and another Quan-controlled company, Stewardship Investment Advisors, earned some $90 million in fees from its Petters investments, the SEC said. The agency wants that money back, and it wants Quan's assets frozen, including a $14 million payment from the Petters receiver that could come as soon as today.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…