Police Raid Italian Hedge Fund Manager In Renewed Fraud Probe

Nov 17 2011 | 12:42pm ET

A prominent Italian finance professor and former hedge fund manager faces a local criminal investigation into allegations that he defrauded investors.

Italian police on Tuesday raided the home and office of Alberto Micalizzi, whose London-based hedge fund, Dynamic Decisions Capital Management, collapsed in 2009 after losing the lion's share of its assets in 2008. Prosecutor Alfredo Robledo told Reuters that he and his co-prosecutor, Tiziana Siciliano, "found some very significant materials" among the documents and computers seized in the searches.

The renewed investigation into Micalizzi and Dynamic Decisions follow the decision of the U.K.'s Serious Fraud Office to drop its own probe of the hedge fund last year. Micalizzi, who said he is considering legal action, referred to the SFO's decision in a statement.

"Further investigations carried out in the last three years by other authorities in the United Kingdom… ended up excluding the hypothesis of fraud and clearing up doubts on how the company managed facts which today are reported by certain newspapers as new."

The Italian investigation, and a renewed U.K. probe by the Financial Services Authority, follow an August Reuters investigation that found that almost all of the DD Growth Premium's fund's US$550 million in assets were invested in highly illiquid bonds issued by a company based in a trailer park outside of Phoenix and backed by a global network of shell companies. What's more, Reuters found, the head of the Phoenix company was a fugitive from justice in the U.S. and the head of one of the charities that backed the bonds was a Russian who had been convicted of fraud.

In addition, last year, an Irish judge found that Micalizzi had set up "a fraudulent scheme" and misled investors.

Micalizzi is a professor at Milan's prestigious Bocconi University, where he specializes in options pricing. The school, which said it is cooperating with the investigation, suspended Micalizzi on Tuesday.

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