Hedge Fund Founder Charged With Defrauding Investors

Feb 20 2008 | 7:42am ET

The founder of hedge fund Lancer Group has been charged with defrauding investors out of more than $200 million.

Michael Lauer and four others have been charged with wire fraud and conspiracy to commit fraud. Lauer and his co-defendants each face up to 25 years in prison and $500,000 in fines if convicted.

According to the U.S. Justice Dept., Lauer, Martin Garvey and Eric Hauser, who owned the hedge fund firm, conspired with Laurence Isaacson and Milton Babarosh to inflate the performance of the Lancer hedge funds. In a scheme that allegedly ran from 1999 to 2003, Lancer would buy large quantities of restricted shares in shell companies, including those run by Babarosh. The hedge fund would then buy more shares on the open market, artificially driving up the price.

Lauer is charged with falsely valuing the securities held by the hedge fund and creating fake portfolios, resulting in fraudulently higher performance fees, as well as maintaining his existing investors and attracting new ones.


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Is Steven Cohen Going to Buy the Brooklyn Nets?

Jan 19 2015 | 6:49am ET

Rumors that Steve Cohen was interested in the Brooklyn Nets emerged after Scott...

Guest Contributor

Investors Benefit From Evolution Of Fund Of Hedge Funds Model

Jan 22 2015 | 12:27pm ET

The evolution of the fund of hedge funds model over the last few years represents...

 

Editor's Note