After Five Years On The Lam, Hedge Fund Fraudster Found In Austria

Jul 9 2007 | 11:55am ET

After five years on the run, hedge fund fraudster Michael Berger is back in custody. And though he need not worry about facing the music in the U.S., his homeland has its own plans for the man whose Manhattan Investment Fund lost some $400 million betting against Internet stocks in the late 1990s.

Berger, who went on the run in March 2002 after pleading guilty to securities fraud in New York two years earlier, was arrested near Wels, Austria, while driving towards Salzburg, by Austrian police.

“He was in hiding,” a spokesman for Austria’s federal police told the Associated Press. “It took quite a long time until we hit on where he was.”

Although Austria will not extradite Berger, an Austrian national, to the U.S., the Austrian police said the Federal Bureau of Investigation was involved in the hunt for the fugitive. But among the losers in his funds—and there were many, as the Manhattan fund lost some $400 million of the $575 million it raised—was Bank Austria, and Austrian authorities have charged Berger with fraud there.

Berger had faced up to 10 years in prison and a $1.25 million fine in the U.S.

In addition to bad investment timing—not only did Berger bet against Internet stocks from 1996 to 1999, while their price soared, his fund went belly-up in January 2000, just two months before the Internet bubble burst he’d hoped for came—Berger admitted he lied in statements to investors. Prosecutors say he overstated both the fund’s performance and its market value.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

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.