Hedge Fund Founder Charged With Defrauding Investors

Feb 20 2008 | 8:42am 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

Q&A: Old Hill's Stone On Private Debt, P2P And Credit Bubbles

Jun 6 2017 | 7:52pm ET

While institutional capital continues to flow into the broader private debt sector...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: Asia-Focused Hedge Funds Offer Great Opportunities

Jun 23 2017 | 3:33pm ET

Emerging market strategies have outperformed their developed-market peers for five...

 
Error

From the current issue of