New York (HedgeCo.Net) – Two New York residents were charged yesterday by the Commodity Futures Trading Commission after allegedly misappropriating at least $553 million of client’s funds.
Stephen Walsh of Sands Point, NY and Paul Greenwood of North Salem, NY are being hit with futures fraud in connection with their companies, which include Westridge Capital Management Inc., WG Trading Investors, LP, and WGIA, LLC.
“Defendants treated investor money– some of which came from a public pension fund– as their own piggy bank to lavish themselves with expensive gifts,” said Stephen J. Obie, Acting Director of Enforcement for the CFTC.
According to the complaint, Walsh and Greenwood took approximately $1.3 billion from investors in their entities since 1996. The men allegedly told their clients that all of the funds would be employed in a single investment strategy of index arbitrage.
They then doctored false promissory notes to keep up the appearance to investors. In reality, the funds were transferred to another entity, where Walsh and Greenwood dipped into the cash for personal spending sprees which included horses, residences, and even an $80,000 teddy bear. It is estimated that they withdrew $160 million total for personal expenses.
The CFTC is seeking a statutory restraining order that will freeze their assets while preserving records.
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