Second Hedge Fund Sued In Illarramendi Ponzi Scheme

May 17 2011 | 10:14am ET

The Securities and Exchange Commission has sued a second hedge fund in an alleged $540 million fraud.

Highview Point Partners was formerly co-owned by Francisco Illarramendi, who pleaded guilty to running a Ponzi scheme in March. According to the SEC, Highview is holding assets tied to Illarramendi and was used by him to perpetuate his scheme.

“Illarramendi conducted the fraud using the Highview funds and” his Michael Kenwood Group hedge funds “in tandem, engaging in many related transactions between the two groups which included purported loans and extensive undocumented transfers of cash between them,” the SEC said in its amended complaint.

Highview’s assets, along with the assets of its three hedge funds, were temporarily frozen at the SEC’s request.

Illarramendi was a co-owner of Highview from 2005 through 2010. The firm is now owned by Frank Lopez and Christopher Luth, who have not been accused of any wrongdoing. Highview filed for bankruptcy on May 9, reporting as much as $500,000 in assets and as much as $500 million in liabilities.

Earlier this month, a Venezuelan accountant admitted to falsifying documents to help Illarramendi cover up the scam. According to prosecutors, Juan Carlos Guillen Zerpa and another man, who has pleaded not guilty, produced a bogus letter from an accountant in Venezuela verifying $275 million in imaginary assets. Illarramendi allegedly paid the two men more than $3 million for the letter.


In Depth

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

SEI: Private Debt Coming Into Its Own

Mar 8 2017 | 9:24pm ET

The explosive growth of private debt over the past few years has caused the lines...