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

Creating An Offshore Hedge Fund Dream Team: The Seven Key Players

Jun 26 2015 | 6:47am ET

If you want to set up an offshore hedge fund, like any great team, you’re only...

Lifestyle

Hedgies Set to Compete in Wall Street Decathlon

Jun 8 2015 | 12:37am ET

The Wall Street Decathlon — a 10-event physical challenge that will crown “Wall...

Guest Contributor

6 Essential Principles To Balance Your Investment Risk

Jun 26 2015 | 10:07am ET

In this article, financial expert Greg Silberman explores how to hedge a private...

 

Editor's Note