Lancer Hedge Fund Fraud Trial Nears End

Apr 21 2011 | 10:09am ET

More than 1,000 miles from the Manhattan federal courthouse where yesterday lawyers made their closing statements in the Raj Rajaratnam trial, the trial of another former hedge fund manager moved towards its close.

Closing arguments were heard in the case against Lancer Group founder Michael Lauer and co-owner Martin Garvey. The two, who are on trial in Miami federal court, are accused of defrauding investors out of more than $200 million.

The two men—among five charged in the case—"were trying to pull the wool" over their clients eyes, manipulating the value of their hedge fund's holdings, causing hundreds of millions in losses. Prosecutors allege that Lancer bought large quantities of restricted shares in shell companies, including some owned by a co-conspirator. The hedge fund would then buy more shares on the open market to artificially drive up the stock price to a pre-planned level.

Lauer also created fake portfolios and got inflated appraisals of the companies held by Lancer, prosecutor Harold Schimkat said.

"While the investors are losing hundreds of millions of dollars, he was still pulling out $35 million in cash," Schimkat said.

Lauer's lawyer, public defender Michael Caruso, said that his client was actually a shrewd investor who "did not do anything illegal or commit any wrongdoing." Caruso noted that Lauer "could have taken everything and run" before his arrest, but didn't, planning to "clean things up and make his investors whole."

If convicted, the two men each face up to 25 years in prison.


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

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.