Calif. Hedge Fund Manager Arrested

Oct 5 2012 | 1:10pm ET

A California man has been accused of simply stealing more than half-a-million-dollars from a retired teacher.

According to prosecutors and the Securities and Exchange Commission, which filed suit against Hausmann-Alain Banet and his Lion Capital Management in San Francisco, Banet promised to invest the former teacher's $544,000 in his long/short hedge fund. Instead, he invested it in himself, using it to pay his mortgage, office rent and the salaries of Lion's staff members, the SEC alleges.

Banet allegedly kept the ruse going through phony account statements that showed positive returns and pointed to an independent administrator that he had not actually hired.

Banet was arrested on Wednesday and remains in jail, pending a Tuesday bail hearing. He faces charges of wire fraud, mail fraud and money laundering.

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