Staten Island Hedge Fund Fraudster Seeks Leniency For Profits

Aug 5 2011 | 12:07pm ET

The lawyer for one hedge fund fraudster has struck upon a possibly novel argument for leniency at sentencing.

Alan Futerfas, in a sentencing memorandum, told the judge who will sentence his client on Aug. 11 that Kenneth Marsh should receive much less than the 14 years he could get under federal sentencing guidelines because he made his clients money. It seems, Futerfas said, that while Marsh lied about a great number of things in regard to his Gryphon Holdings hedge fund, his returns were not among them.

"Gryphon's trade recommendations were generally more profitable than the market overall and often were considerably more profitable," Futerfas wrote. The lawyer also took issue with the Securities and Exchange Commission's allegation that Marsh, who pleaded guilty in April to securities fraud, overstated those returns.

While the SEC said that March lied about a 385% profit, Futerfas claims that a 2009 trade made by Marsh did, in fact, turn such a profit over a two-week period. And he said all of Marsh's buy and sell recommendations proved profitable.

"The proof is incontrovertible and shows that Gryphon was responsible for providing a steady stream of mostly profitable trade recommendations," Futerfas wrote.

The returns may have been real, but most of Gryphon's story was not: According to prosecutors, Gryphon lied about its assets under management, invented a relationship with George Soros and made up offices in Manhattan, London and Sydney, Australia, when it was actually run out of a Staten Island, N.Y., strip mall. Marsh also allegedly made up two traders.

A total of 18 people have pleaded guilty in the case.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

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

CAIS: How Technology is Disrupting the Alternative Investment Industry

Nov 7 2017 | 5:35pm ET

If there’s one thing that alternative investment professionals can agree on, it...