Hedge Fund Osiris Accused Of Fraud

Aug 8 2012 | 12:38pm ET

Seven months after Osiris Partners' chairman skipped town with all of its money, New Jersey officials have sued the hedge fund for fraud.

According to the lawsuit, Osiris ripped off about 76 investors to the tune of at least $4 million of the $12 million raised. The lawsuit names Osiris, an affiliate and employees and others who sold interests in the hedge fund, including the missing chairman, Peter Zuck.

New Jersey said Zuck was a three-time convicted criminal, a fact that Osiris did not mention to investors.

"We allege these defendants enriched themselves by pocketing at least $4 million of investors' hard-earned money from the fund while they concealed substantial losses," Jeff Chiesa, New Jersey's attorney general, said. The lawsuit alleges that Osiris also sent investors phony account statements and overstated its assets to charge higher management fees, and is seeking to freeze the defendants' assets.

"This case clearly illustrates why we urge consumers to perform their due diligence before investing their money," Eric Kanefsky, acting head of the Garden State's Division of Consumer Affairs, said. "Unregistered people selling unregistered securities are serious red flags, as is any past criminal history in the securities industry."

In addition to Zuck and his wife, Laurie Mazza, the lawsuit names Osiris CEO Michael Spak, Controller Joseph Spak and Chief Operating Officer John Najarian, as well as five others and four relief defendants.

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