Hedge Fund Fraudster Beats Obstruction Rap

Dec 14 2007 | 11:11am ET

A convicted hedge fund fraudster dodged an obstruction of justice rap yesterday after a judge called the testimony of the government’s star witness “an abomination.”

Keith Gary Gilabert, who last year pleaded guilty to defrauding investors of $7 million in a phony hedge fund, and his mother-in-law had been charged with asking a Los Angeles real estate broker to lie to the Federal Bureau of Investigation. But U.S. District Judge Stephen Wilson acquitted the pair, calling the testimony of the broker, Bradley Gerszt, “maybe the worse I’ve ever seen.” Gerszt had admitted to lying to the FBI.

Prosecutors alleged that Gilabert and Hiromi Seele asked Gerszt to lie about the sale of two plots of land in Valencia, Calif. The proceeds of those sales were supposed to go to the FBI as part of Gilabert’s settlement with the government.

Gilabert had faced as much as 10 years in prison on the obstruction charge, but his acquittal doesn’t mean he’ll be breathing free anytime soon: He remains in prison following his guilty plea to the fraud charges.


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