An upstate New York hedge fund manager has pleaded guilty to ripping investors off to the tune of $12.6 million.
Lloyd Barriger admitted that he misled new investors in his Gaffken & Barriger hedge fund after it had collapsed, the victim of a series of failed real-estate loans. Rather than admit his failures, Barriger continued to sell the fund as safe and liquid and promised 8% annual returns, even as it defaulted on a $20 million credit line and delinquencies in its portfolio increased.
"Once again, belief in hedge funds by hopeful investors proved to be sadly misplaced," Preet Bharara, the U.S. Attorney in Manhattan, said. "In this case, the perpetrator was not in a sleek Manhattan building but rather in Sullivan County."
Barriger's firm was based in the town of Monticello, about 90 miles northwest of New York City.
Barriger, who lives in Damascus, Pa., was indicted on securities fraud, mail fraud and conspiracy charges in February. He pleaded guilty in White Plains, N.Y., federal court on Friday, and faces up to 65 years in prison when he is sentenced Nov. 15. Prosecutors also plan to seek $12.6 million in forfeitures.