Boston Herald – Federal regulators yesterday moved to freeze the assets of a Wakefield hedge-fund manager who allegedly engaged in a Ponzi-like scheme that included diverting $11.5 million in client funds to a firm he co-founded with a college pal.
The Securities and Exchange Commission said Frank J. Russo, 51, of Wakefield – via his firms FJR Corp., Russo Associates and Eliot Partners – raised as much as $25 million over the past 10 years from 160 investors, promising them returns of at least 10 percent.
But when the 10 percent returns didn’t materialize, Russo began siphoning off money to a California firm that Russo co-founded with a friend from college, the SEC said yesterday in a complaint.
“When that investment proved illiquid, (Russo and his firms) began a Ponzi scheme, using new investors to pay returns and redemptions to earlier investors,†said the SEC. The feds added Russo’s firms issued false financial statements to customers to deceive them into believing their money was safely invested in bonds, commodities and currencies.
