Hedge Fund Fraudster Grebow Gets Four Years In Prison

Mar 20 2009 | 2:05am ET

Convicted hedge fund Ponzi schemer Bret Grebow has been sentenced to four years in prison for defrauding investors of almost $8 million.

Grebow, co-founder of Montvale, N.J.-based hedge fund HMC International, pleaded guilty last year to investment adviser fraud. He swindled investors of $7.8 million, according to prosecutors, before HMC collapsed in September 2005.

“Grebow operated HMC as a classic Ponzi scheme, using new investor funds to pay distributions and redemptions to existing investors,” prosecutors charged.

Grebow had faced up to five years in prison. In addition to his spell in prison, U.S. District Judge Barbara Jones ordered Grebow to forfeit the $7.8 million he stole. He is to report to prison on June 22.

According to prosecutors, HMC told investors it engaged in “momentum trading,” earning returns of as much as 70%. In fact, prosecutors allege, there were no returns at all, as Grebow, the firm’s sole “trader,” didn’t invest the money.

Grebow and his HMC co-founder, Robert Massimi, settled SEC charges two years ago. They agreed to pay $4.6 million to settle the charges that they lied to 80 investors, from whom they collected $12.9 million. The SEC said the two men misappropriated more than $5 million of investor money, with Grebow buying himself a Lamborghini Gallardo, among other luxuries.

Massimi was not charged criminally in the scam.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR