Rocky Mountain High Fine For Hedge Fraud Trio

Jun 14 2007 | 1:48pm ET

Call it divine justice. A former pastor and his two allegedly unholy apostles have agreed to pay some $21.65 million to settle a civil suit relating to their allegedly fraudulent hedge fund, XL Capital Partners.

The trio, Hamilton Bird, David Newton and Douglas Scott, has also agreed to lifetime bans from the securities industry. The $21.65 million judgment represents the full amount lost by 350 investors in the alleged scam.

Colorado prosecutors allege that XL collected some $24 million from 450 investors, many recruited by Scott, the former pastor of the now-defunct River of Life Church, the Colorado Springs Gazette reports. The money didn’t go into the firm’s Vision Fund, according to the indictment, but to such prime investments as a corporate jet and a home for Newton, who has agreed to testify against his cohorts in exchange for a plea bargain. Bird goes to trial on Aug. 13 and Scott faces a judge on Sept. 4. If convicted of fraud and theft, both face prison terms of four to 12 years.

In light of his cooperation, Newton received 15 years of probation and was ordered to serve 200 hours of community service.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of