Hedge Funds Fall Victim To Medical Accounts Ponzi Scheme

Sep 6 2013 | 4:08am ET

A number of hedge funds—including Platinum Partners—were targets of a $278 million Ponzi scheme.

Four men have been charged with attempting to bilk the hedge funds by misleading them about the value of medical accounts receivable that they had purchased for a fraction of a penny on the dollar. The scam ran from 2007 through 2010.

Two of the men—Robert Feldman and Douglas Kuber—have already pleaded guilty to conspiracy charges. The other two, Jonathan Rosenberg and Richard Shusterman, were arrested this week.

The indictment alleges that Rosenberg and Kuber ran a company called Account Receivable Services, which bought the medical accounts receivable from International Portfolio Inc., headed by Shusterman and Feldman. The men then securitized the holdings, lying about their purchase prices, collection results and resale values to lure investors. In an effort to lure another hedge fund--Eton Park--the men allegedly told that fund that a Platinum-financed portfolio had received more than 10 times the collections it actually garnered. Eton Park did not end up investing in the scheme.

For their troubles, Kuber and Rosenberg allegedly received kickbacks from Shusterman totaling $8.3 million.

Shusterman and Rosenberg face up 200 years in prison on the conspiracy and wire fraud counts. Feldman and Kuber face up to 20 years in prison when they are sentenced.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR