An accused hedge fund fraudster wants the Securities and Exchange Commission off of his case.
George Jarkesy, a conservative talk-radio host accused of defrauding investors in his hedge fund with the help of famed boiler-room operator Anastasios Belesis, has asked a federal judge to put a stop to the agency's proceedings against him. According to Jarkesy, the SEC has already made up its mind and allowing it to hold the administrative hearing, scheduled for Monday, would violate his constitutional rights.
In his court filing, Jarkesy took issue with the SEC's statement following its decision to sue in March. As is the regulators standard practice, it laid out its case against Jarkesy, alleging that he lied to investors about his independence from Belesis and inflated the funds' value.
In doing so "in advance of the adjudication and without permitting plaintiffs to present any evidence or defenses, the SEC has removed all doubt about its ability to serve as a fair tribunal," Jarkesy said in a complaint filed yesterday in Washington federal court.
In addition, the SEC's allegations have irreparably harmed both Jarkesy and his investment firm, Patriot28, which was known as John Thomas Capital Management prior to the charges. Belesis' firm is called John Thomas Financial.
Belesis in December agreed to settle the allegations, accepting a one-year ban from the securities industry and a $1 million fine. The SEC could seek up to $100 million in fines against Jarkesy, as well as a lifetime ban.
According to the SEC, Belesis bullied Jarkesy into paying more in fees and pushed him to invest in companies that JTF has interests in. All told, Belesis' firm received nearly $5 million from Jarkesy's funds, much of it for "nearly inconsequential work."