Monday, 8 February 2016
Last updated 1 hour ago
Aug 25 2011 | 12:55am ET
The founder of hedge fund Lake Shore Asset Management yesterday pleaded guilty to running a $292 million fraud.
Philip Baker, who was indicted in 2009, entered his plea on one count of wire fraud. Prosecutors said they would seek 20 years in prison when Baker is sentenced on Nov. 17.
Baker had originally faced dozens of counts of fraud, embezzlement, contempt and obstruction of justice charges. But prosecutors agreed to drop the latter two to win his extradition from Germany last year.
Regulators pulled the plug on Chicago-based Lake Shore in 2007, accusing it of improperly charging incentive fees and hiding almost $40 million in losses from investors. According to the Commodity Futures Trading Commission, the hedge fund sent phony account statements claiming substantial profits.
Baker himself stole some $33 million from investors for his own purposes, prosecutor Clifford Histed told U.S. District Judge John Darrah in Chicago.
"That's it in a nutshell," Histed said.
"Do you disagree?" Darrah asked Baker, who replied, "No, your honor."
In addition to the decades in prison, Baker is liable for $154 million in restitution and may be deported to his native Canada after completing his sentence.