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: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this race. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

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.