A federal judge in Alabama may make it easier for accused hedge fund fraudster Anthony Klatch to get out of jail.
Klatch has been held on $200,000 bail since his arrest in August on charges that he ripped investors in his TASK Capital Partners off to the tune of $2.3 million. But the federal judge in Florida attached a condition: Klatch had only a week to make bail or he'd be detained until his trial.
That's unfair, his lawyer, Dom Soto, complained.
"Having reached a decision that falls short of detention, it is antithetical to both the purpose and the scheme of the [Bail Reform] Act to revert automatically and capriciously to the higher level of detention," he wrote to U.S. Magistrate Judge Katherine Nelson.
Prosecutors have responded that only a U.S. District judge has the authority to overturn the detention order.
Klatch's mother, Charmaine Maynard, has been trying to raise the money for her son's release, so far without effect. Maynard claims her son, who pleaded not guilty to the charges against him, suffers from bipolar disorder.
Klatch and his partner, Timothy Sullivan, are accused of lying to TASK investors. The duo allegedly told investors that the fund, which they founded in 2009, had already been in business for 12 years. Their prospectuses were also filled with other "material misrepresentations and material misleading omissions," the indictment alleges.
According to prosecutors, Klatch and Sullivan, who each invested a whole $1 in TASK, invested only about 60% of the money they raised by the end of 2009, losing everything on a handful of spectacularly bad investments, at least two of which posted big losses in just minutes. The rest of the money was used to "pay off the angry investors" or simply funneled into Klatch's "personal bank account," prosecutors say.
Rather than coming clean, in January 2010 Klatch and Sullivan told investors that "their entire investment had been lost in a single trade."