Hedge Fund Manager Fined For Defrauding Clients

Aug 28 2008 | 8:59am ET

Hedge fund manager Mark Boucher has settled a suit with the Securities and Exchange Commission that accused him of misleading investors in his real estate investments.

Boucher, who is also the author of the book “The Hedge Fund Edge,” agreed to pay a $100,000 fine and to refrain from acting as an investment adviser for five years.
 
One other defendant in the case also settled. Gary Johnson, who owns of one of the companies for which Boucher solicited investments, agreed to return $1.8 million in commissions and pay $820,000 in additional fines. A third defendant, John Brake, has not yet settled.

Regulators allege that Boucher, who sends out a monthly newsletter with investment recommendations, told his clients that investments with Johnson’s and Brake’s companies were secured by real estate holdings, and that they had generated $20 million 1999 and 2005. However, one of the firms didn’t even own property, and the other owned one property that was riddled with debt.

Instead of investing his clients’ money, Boucher used the money to pay his mortgage. The other defendants purchased expensive automobiles and rented vacation homes with the money.

"Boucher lured clients into these fraudulent real estate deals by exploiting his reputation as a successful hedge fund manager," said Marc Fagel, director of the SEC's office in San Francisco.


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