FINalternatives: Hedge Fund & Private Equity News

Service Providers

Seeking Alpha Certified

Send to Friend

FromTo


Article from FINalternatives

Wood River Founder Gets Just Three Years For Fraud

A former Idaho hedge fund manager got off relatively easy when he was sentenced yesterday on fraud charges.

John Whittier, the founder of the now-defunct hedge fund Wood River Capital Management, was sentenced to three years in prison by a federal judge in Manhattan, far less than the 15½ to 19½ years called for in his May plea agreement. U.S. District Judge Jed Rakoff indicated that Whittier’s autistic child led him to hand down the much lighter punishment.

“Mr. Whittier is a very significant component in the development of his autistic child,” Rakoff said. “Bad as what Mr. Whittier did… people he was cheating were not people who were rendered destitute as a result.”

Not destitute, perhaps, but roughly $88 million lighter in the pocket: Whittier admitted pouring 85% of his funds’ portfolios into Endwave Corp. stock. Not only was that in contravention of the funds’ promise not to invest any more than 10% of their portfolios in any one company, but he failed to report the holding in the California radio equipment maker—which amounted to 80% of its shares—to the Securities and Exchange Commission, as required. He also admitted that he failed to disclose his holdings in New Jersey publishing concern Mediabay.

In addition to being sentenced to three years incarceration, Whittier will also have to forfeit about $5.5 million. He is set to report to prison on Jan. 15.


Article sent from FINalternatives.com