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

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

FATCA for Hedge Funds: Eight Common Pitfalls

Sep 1 2015 | 10:56am ET

FATCA is now a way of life for those in the financial industry and most professionals...

 

Editor's Note