Philly Hedge Fund Manager Indicted

Nov 9 2007 | 2:41pm ET

The founder of collapsed hedge fund Philadelphia Alternative Asset Management has been charged with defrauding investors of $200 million.

The U.S. attorney in Philadelphia announced the indictment of Canadian Paul Eustace today, alleging he sent investors phony account statements showing profitable investments for four years before authorities shut the hedge fund down. In fact, the fund posted losses of some $179 million; it raised just $230 million. He is also accused of making loans to himself using investor funds, and boosting his management fee based on the non-existent profits. He was charged with two counts of commodities fraud.

PAAM, which regulators shuttered in June, had offices in Canada and King of Prussia, Pa., outside of Philadelphia.

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