Penniless Fraudster Gets Free Lawyer As Receiver Sues For Alleged Bribes

Feb 15 2012 | 12:55pm ET

Francisco Illarramendi stole hundreds of millions of dollars from clients, but he can't pay for his lawyers anymore.

Illarramendi, who pleaded guilty in March to running a Ponzi scheme at his Michael Kenwood Group and Highview Point Partners hedge funds, received a court-appointed attorney last week after requesting one.

"I'm not employed and my assets have been frozen," Illarramendi, who is awaiting sentencing, told U.S. District Judge Stefan Underhill in Bridgeport, Conn. "I'm subsisting off charity from friends," and after paying his bills and buying food, there "is nothing left to pay my legal fees."

Illarramendi told Underhill he is already representing himself in several civil suits, including one filed by the Securities and Exchange Commission.

Underhill appointed former federal prosecutor Alex Hernandez to take over Illarramendi's case from John Gleason.

Separately, John Carney, the court-appointed receiver in the Illarramendi case, filed a raft of lawsuits in Connecticut federal court seeking the return of tens of millions of dollars in alleged bribes and kickbacks.

Among the people accused by Carney is Juan Montes, a former senior investment manager at the pension fund for Venezuela's state-owned oil company, Petreleos de Venezuela. PDVSA was by far the biggest victim of Illarramendi's $500 million fraud.

According to Carney, Illarramendi paid Montes $35.7 million in bribes to allow him to continue the scam.

Prominent Venezuelan businessman Moris Beracha was also named. "Illarramendi's business relationship with Beracha coupled with Beracha's access to and connections with Venezuelan government and banking officials was instrumental to Illarramendi's ability to perpetuate the Ponzi scheme," Carney's lawsuit alleges.

"It was a measure of Illarramendi's desperation to maintain and conceal his fraud, and his fanciful belief that a financial windfall was right around the corner, that he was willing to pay exorbitant amounts in bribes and kickbacks to ensure that he was able to attract investments from and participate in transactions with PDVSA's pension funds," a lawsuit added.


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.