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

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Moore Capital PM Fired After Raucous Hamptons Party

Jul 7 2016 | 10:47pm ET

A portfolio manager for Louis Bacon’s $15 billion hedge fund Moore Capital Management...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...