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Newsday – Bernard Madoff’s top lieutenant in his Ponzi scheme is scheduled to plead guilty Tuesday to federal charges in what many legal observers believe is a cooperation deal that could lead to trouble for some major hedge fund operators.
Frank DiPascali Jr., 52, of Bridgewater, N.J., had been a key Madoff aide, working in a closely guarded office on the 17th floor of Manhattan’s Lipstick Building, where the Ponzi scheme operated. It was DiPascali, investigators and defense attorneys said, who dealt with the numerous hedge funds and was involved in mailing myriad false account statements sent to thousands of defrauded clients.
West Palm Beach (HedgeCo.net) – The Connecticut-based hedge fund manager who had his assets frozen by the SEC last month, Francesco Rusciano, was released to the custody of his parents on a $500,000 bond after a federal court hearing.
According to the SEC’s complaint, Francesco Rusciano solicited investments for two hedge funds, Ponta Negra Fund I, LLC and Ponta Negra Offshore Fund I, LTD, which is the principal of Ponta Negra Group, LLC, located at his residence in Stamford, Conn.
The hedge fund manager also sent out an e-mail to investors saying that his Ponta Negra hedge funds had $59 million in assets under management as of February 2009. According to the SEC’s complaint, the hedge funds had less than $10 million.
The SEC says that Rusciano forged brokerage account statements to make it appear that another hedge fund account had more than $43 million in assets, when it had less than $3 million.
"Rusciano went to great lengths to deceive investors, and the SEC is committed to ensuring that money managers who provide inaccurate information to investors and fail to uphold their fiduciary duties are held responsible for their misconduct," said Rose Romero, Director of the SEC’s Fort Worth Regional Office.
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West Palm Beach (HedgeCo.net) – The SEC has frozen the assets of a Connecticut-based hedge fund manager, alleging that he forged documents, promised false returns, and misrepresented assets managed by the funds to illicitly raise more than $30 million from investors.
According to the SEC’s complaint, Francesco Rusciano solicited investments for two hedge funds he controls, Ponta Negra Fund I, LLC and Ponta Negra Offshore Fund I, LTD, which is the principal of Ponta Negra Group, LLC, located at his residence in Stamford, Conn.
The hedge fund manager also sent out an e-mail to investors saying that his Ponta Negra hedge funds had $59 million in assets under management as of February 2009. According to the SEC’s complaint, the hedge funds had less than $10 million.
The SEC says that Rusciano forged brokerage account statements to make it appear that another hedge fund account had more than $43 million in assets, when it had less than $3 million.
"Rusciano went to great lengths to deceive investors, and the SEC is committed to ensuring that money managers who provide inaccurate information to investors and fail to uphold their fiduciary duties are held responsible for their misconduct," said Rose Romero, Director of the SEC’s Fort Worth Regional Office.
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New York (HedgeCo.Net) – Texas Resident George D. Hudgins must pay $71 million following a federal court order obtained by the CFTC, to pay back victims of his Ponzi scheme and to settle a $15 million penalty.
According to the original complaint, Hudgins swindled about $88 million from June 2001 to May 2008, in a commodity pool operation that was supposed to trade futures and options. Hudgins told investors that his fund was reaping returns of up to 99 percent annually, when in reality, the pool had experienced a net loss since its inception in December 2003, and had lost a total of about $28 million.
In typical Ponzi scheme fashion, Hudgins used about $17 million from the pool to pay “returns” to existing investors and keep up the façade. In addition, he doctored the account statements to reflect a stellar performance. Other funds from the pool were withdrawn by Hudgins to pay for his extravagant lifestyle, which included Tiffany jewelry, antique sports cars, real estate and a plane.
When a judge froze the assets of Hudgins and appointed a receiver to distribute the funds, only $24 million was collected.
Last September, Hudgins pleaded guilty to wire fraud, money laundering and embezzlement. He was sentenced last month to serve 121 months in a federal prison.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – Idaho Falls resident Daren L. Palmer has been charged with operating a $40 million Ponzi scheme through his unregistered company, Trigon Group, according to the Commodity Futures Trading Commission.
Palmer is being charged with solicitation fraud and misappropriation of pool funds after it was discovered he used client funds for personal expenses and failed to register with the CFTC as a commodity pool operator.
According to the complaint, Palmer allegedly bilked $40 million from investors since at least September 2000, by promising returns of 7 percent monthly and 20 percent annually. From that $40 million, he only placed $4.5 million in his trading accounts.
“This is another unfortunate example of the maxim, ‘If it appears too good to be true, it probably is,’ said Stephen J. Obie, Acting Director of the CFTC.
Palmer fraudulently claimed he was a successful futures trader and that his pool had a successful track record. Palmer doctored false account statements as a means to keep up the appearance. He later admitted to using new capital coming in to pay off older investors, in a typical Ponzi scheme fashion.
Palmer withdrew about $25,000 to $35,000 per month and used the money to pay off credit card debt, build a new home, and purchase snowmobiles. Palmer’s next hearing is scheduled for April 23rd.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
San Francisco Gate – Friday, January 9, 2009 Alexander James Trabulse, 61, was taken into custody Monday, according to U.S Customs and Border Protection officials. He appeared later that day before U.S. Magistrate Elizabeth Laporte in San Francisco and is to return to court today.
He was arrested three days after federal prosecutors charged him with mail fraud in a complaint filed in U.S. District Court in San Francisco.
Authorities said Trabulse sent account statements to investors in his Fahey Fund that inflated the hedge fund’s returns by as much as 200 percent, while using investor money to purchase cars and finance shopping sprees for family members.
