Parents Bail Out Alleged Hedge Fund Fraudster

May 5 2009 | 11:16am ET

Francesco Rusciano, operator of a Stamford-based hedge fund, Ponta Negra, was released yesterday from federal custody on a $500,000 bond.

U.S. Magistrate Judge Holly Fitzsimmons released Rusciano into the custody of his parents, who put their homes in New Jersey and Vermont up as collateral for their son, the Stamford Advocate reports.

Rusciano was arrested Friday on one count of mail fraud. According to the U.S. Securities and Exchange Commission, Rusciano forged brokerage statements to overstate the value of his Ponta Negra Group hedge funds, claiming that Ponta Negra Fund I’s account had more than $43 million in it, when in fact it had less than $3 million. He is also charged with lying about the fund’s performance.

The hedge fund fraudster allegedly never told his investors or potential investors that he had been forced to resign from UBS Securities for falsifying reports, or that he was under investigation by the Federal Reserve for allegedly scheming to defraud UBS, and performing illegal trading and banking practices.

Rusciano will be confined to his parents' New Jersey home and is allowed to travel to Connecticut for court or New York to consult with legal counsel or look for a job. He will also have to put his Stamford apartment up as collateral once he finds the title. He and his wife were ordered to surrender their passports.

His next hearing in Bridgeport, Conn., is set for May 21.

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