Wednesday, 24 August 2016
Last updated 24 min ago
Oct 29 2009 | 2:54am ET
Beverly Hills, Calif., hedge fund manager Michael McCready has pleaded guilty to running a $9 million Ponzi scheme.
McCready admitted that he ripped off at least 25 investors, many of them involved in the entertainment industry. He faces up to 20 years in prison.
According to prosecutors, McCready pretended to manage both a hedge fund and more traditional investments. But they say he never actually invested a dime, instead using new money to pay off old investors and spending the rest on himself and his girlfriend. Among the ventures unknowingly financed by McCready’s clients were his girlfriend’s business, a movie written and directed by the fraudster himself, and a trip to the Super Bowl. All the while, investors were kept in the dark with bogus account statements.
“McCready grossly abused his position as an investment adviser,” Michael Wilner, assistant U.S. attorney in Los Angeles, said. “He took deliberate steps to take money that didn’t belong to him, cover that up and send out false statements.”
McCready’s victims are not satisfied with seeing the man many considered a friend behind bars. On the same day that McCready entered his plea on fraud charges, a group of victims sued McCready and his broker, Centaurus Financial. According to that suit, filed in Los Angeles state court, Centaurus failed to meet its “supervisory obligations” and ignored McCready’s malfeasance because it was “motivated by profits, the acquisition of investment clients and the opportunity to line its own pockets.”