New York (HedgeCo.Net) – A federal grand jury in New Haven has returned a 19-count indictment charging three executives of New Stream Capital LLC, a Ridgefield, Connecticut hedge fund, with conspiracy, securities fraud, and wire fraud offenses, the FBI reported late last night.
David Bryson, 44, of Ridgefield, Connecticut; Bart Gutekunst, 61, of Weston, Connecticut; and Richard Pereira, 40, of Ridgefield, surrendered to the FBI in New Haven. Bryson and Gutekunst were managing partners and principals at New Stream Capital LLC, and Pereira was the chief financial officer. Bryson and Gutekunst were released on $5 million bonds and Pereira was released on a $300,000 bond.
“In November 2007, New Stream launched new feeder funds, one based in the United States (U.S. Fund) and a series of funds based in the Cayman Islands (Cayman Fund). New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund. Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, it is alleged that Bryson, Gutekunst, and Pereira set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption. As part of the scheme, Bryson, Gutekunst, and Pereira had New Stream staff secretly reorganize the fund structure so as to effectuate the priority change.” According to statements made in court.
The indictment further alleges that New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open or that it was being given priority over the Cayman Fund. Moreover, New Stream continued to market New Stream to investors by concealing from them the magnitude of the actual pending redemptions and by using deceptive marketing materials that failed to disclose the existence of New Stream’s Bermuda Fund.
Each of the defendants is charged with one count of conspiracy, 10 counts of securities fraud and eight counts of wire fraud.
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