Hedge Fund Fraudsters Get Three Years

Sep 20 2012 | 10:33am ET

Two hedge funds partners-in-crime will do the same time for their roles in a million-dollar fraud.

Christopher Fardella and Michael Katz were each sentenced to three years in prison yesterday. The duo, half of the partnership at Florida-based KMFG International, had pleaded guilty to securities fraud, mail fraud and conspiracy last year.

According to prosecutors, the two men lied to investors about their own backgrounds and about KMFG's performance, using cold calls to generate some $1.03 million in investments. But almost all of the money was lost or spent by the co-conspirators, on deluxe trips to Las Vegas, among other things.

Fardella and Katz told investors that their fund was run by a team with proven success, one that featured veteran executives of the oil and gas industry, and that one of the team members had earned "cumulative returns for 30 months of over 165%." None of it was true. A third co-defendant, Kristian Murphy-Fuhse, pleaded guilty to the scheme in January and is awaiting sentencing.

"Their sentences demonstrate to those who may consider similar schemes that smoke and mirrors will not fool law enforcement, and you will be held accountable for such fraudulent activity," Manhattan U.S. Attorney Preet Bharara said.

In addition to jailtime, Fardella and Katz were ordered to pay $981,000 in restitution.


In Depth

Hedge Fund Veteran Peter Borish Talks Trading

Dec 17 2014 | 9:32am ET

Peter Borish says 2014 was “tricky” from a trading perspective. “The best...

Lifestyle

Cohen Donates $1.5M To GOP Governors Association

Dec 10 2014 | 7:13am ET

The Republican Governors Association raised close to $25 million from October 1...

Guest Contributor

Q&A With Daniel Gallancy: Institutional Interest In Bitcoin Is Growing Steadily

Dec 12 2014 | 7:54am ET

Daniel Gallancy is founder and CEO of SolidX, a provider of total return swaps for...

 

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.