Mass. Hedge Fund Manager Accused Of Fraud

Oct 27 2011 | 6:43am ET

A federal judge has shut down a Boston-area hedge fund after the Securities and Exchange Commission accused its founder of lying to investors.

The SEC yesterday sued Andrey Hicks and his Locust Offshore Management, which the regulator said raised at least $1.6 million since its launch earlier this year. Hicks claimed that Locust was a British Virgin Islands-incorporated investment pool employing sophisticated mathematical models that Hicks developed at Harvard University. He also claimed that the fund ran more than $1.2 billion, the SEC said.

The only problem, according to the SEC, is that there is no BVI fund—the money raised was placed into bank accounts in Hicks' name. And Hicks isn't the math whiz he claims to be either, according to the complaint, having flunked out of Harvard after just three semesters, earning a D-minus in the only math class he took at the school.

Harvard confirmed that no Andrey C. Hicks has graduated from the university.

A federal judge in Boston yesterday granted the SEC's request for an emergency order, suspending Locust's operations and freezing Hicks' assets.

The SEC said that Cambridge, Mass.-based Locust sought "to defraud investors through the creation of a false and deceptive appearance of a legitimate, existing" fund. "Not only does the Locust Fund not exist as a BVI-incorporated company, but Hicks has transferred substantially all the investors' funds to bank accounts in his personal name and, on information and belief, for his personal use."

Reached by the Boston Business Journal, Hicks denied the allegations, saying Locust is "absolutely" incorporated in the Virgin Islands and that he is "a Harvard alumnus." Hicks said that he has not been contacted by investigators.

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