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HedgeCo.net (West Palm Beach) – ‘Hedge fund operator’ Rod Stringer has pleaded guilty to money laundering in a $14 million Ponzi scheme, federal prosecutors say.
He allegedly took money from 44 victims over 8 years, claiming to be "a day trader and hedge fund operator, although he was not a licensed securities broker," the U.S. Attorney’s Office said.
According to the Securities and Exchange Commission, Stringer doled out about half the money from the phoney Texas hedge fund to some victims, but kept $6.9 million for himself.
"He solicited and enticed individuals to invest money with him by making false representations and promises, such as: the return on investors’ money would be approximately 50% profit; he was a day trader and had a foolproof system; the return on investors’ money would be better than a savings account; the accounts were liquid and investors could withdraw their money anytime; and he had several computers that watched the trend line of stocks automatically and advised him when he should move money in and out of the market," a written statement from prosecutors said.
Stringer faces up to 10 years in prison, a $250,000 fine and restitution. The plea agreement calls for Stringer to forfeit more than $1.5 million, according to Courthouse News Service.
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Chicago Tribune – Federal prosecutors have unsealed a wide-ranging indictment against Philip J. Baker, accusing the head of Chicago-based hedge fund Lake Shore Asset Management Ltd. of defrauding hundreds of investors out of roughly $312 million.
U.S. Atty. Patrick Fitzgerald announced the 27-count indictment Tuesday and said it "was unsealed to facilitate international efforts to apprehend Baker."
Baker is a 44-year-old Canadian citizen last spotted living in Hamburg, Germany, whose location is unknown, prosecutors said. The charges include fraud, obstruction of justice and criminal contempt.
Law.com – Federal prosecutors Thursday unsealed an indictment charging the chief executive of what used to be one of the world’s largest investment funds with constructing elaborate tax shelters for some of his wealthiest clients. The executive, Jeffrey Greenstein, the former head of the Seattle-based fund Quellos Group, and two lawyers face 18 counts related to tax evasion and fraud for a scheme that netted them $86 million in fees and allowed six clients to avoid paying about $400 million in federal taxes, according to the indictment.
What’s interesting for our purposes is that the indictment details how lawyers from Cravath, Swaine & Moore and Bryan Cave blessed the shelters with letters indicating to the taxpayers that they were legal and would withstand scrutiny from the Internal Revenue Service. (The firms are identified as "C.S.M." and "B.C." in the indictment, but two sources familiar with the matter confirm they are Cravath and Bryan Cave. In addition, a 2006 congressional investigation mentioned the role the two firms played in the Quellos tax shelters, and at least one lawyer, Lewis Steinberg, then of Cravath and currently at Linklaters, testified before a congressional subcommittee.)
Seattle Times – Federal prosecutors are expected to unseal indictments Thursday in a massive tax-evasion investigation involving the Seattle investment firm Quellos Group, accusing its officers of operating offshore tax shelters used to hide hundreds of millions of dollars from the government, according to lawyers familiar with the case.
Quellos has been under investigation for at least two years and in 2006 earned its own chapter in a report titled "Tax Haven Abuses: The Enablers, the Tools and the Secrecy" published by the U.S. Senate Permanent Subcommittee on Investigations.
Courthouse News Service – A Beverly Hills man defrauded his family and friends of $44 million by persuading them to invest in his two nearly worthless hedge funds and spent the money on a Malibu Beach home, Porsches, and poker, federal prosecutors say.
Bradley L. Ruderman, 46, quoted as a financial expert by national media, surrendered on Friday after being named in a criminal complaint charging him with fraud.
CNN.com – The girlfriend of a convicted hedge fund manager who disappeared last year, leading to speculation that he had committed suicide rather than report to prison, pleaded guilty on Tuesday to helping him, according to federal prosecutors.
Debra Ryan pleaded guilty to "aiding and abetting Samuel Israel III’s failure to surrender to serve his sentence on June 8, 2008," according to the U.S. Attorney’s Office for the Southern District of New York.
With the guilty plea, she avoids a trial but still faces up to 10 years in prison. But the judge indicated Tuesday that she will most likely face about four to 10 months in prison, federal prosecutors said.
Newsday – Maybe you heard the one about the phony multibillion-dollar Long Island hedge fund that was actually performing a public service.
No? Well, apparently neither did four confidence men, according to federal prosecutors.
The four were convicted yesterday in federal court in Central Islip after walking into a federal sting operation in which they thought they were about to collect $3 billion from a hedge fund. The money was to be used to build what they said was a pipeline through the Russian Republic of Buryatia, prosecutors said.
The unnamed fund was a creation of FBI agents and the Postal Inspection Service, Assistant U.S. Attorney James Miskiewicz said during the seven-day trial.
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.
New York Daily News – Disgraced Park Ave. lawyer Marc Dreier gave fellow scamsters $100,000 to impersonate others in calls to victims, Manhattan federal prosecutors said Tuesday.
The new details emerged at a bail hearing for former broker Kosta Kovachev, 57, arrested yesterday for allegedly helping Dreier try to steal some $100 million from hedge fund managers.
Prosecutors say Kovachev pretended to be a real estate developer’s controller in an October sitdown with hesitant hedge fund managers. Kovachev also impersonated the developer’s CEO in a conference call, prosecutors say.
