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Forbes – U.S. prosecutors said on Tuesday that two former Bear Stearns Cos hedge fund managers facing trial on fraud charges are trying to impede the government’s access to documentary evidence.
Lawyers for one of the accused, Ralph Cioffi, described the allegations as ‘false and inflammatory’ as the government asked a judge for a hearing to review Cioffi’s pre-trial release on $4 million bond and travel restrictions.
Pensions and Investments – Fairfield Greenwich agreed to pay about $8 million to settle charges leveled at the hedge fund-of-funds manager by William F. Galvin, Massachusetts secretary of the commonwealth, in connection with the Madoff Ponzi scheme.
In settling, Fairfield Greenwich neither admitted nor denied the charges made in the Massachusetts’ Securities Division’s administrative complaint, which was filed April 1. Those charges alleged that the company failed to conduct due diligence on Bernard L. Madoff Investment Securities and later misrepresented its due diligence practices to investors in its hedge funds of funds, according to documents on Mr. Galvin’s website. As part of the settlement agreement, Mr. Galvin’s office dropped fraud charges that were included in the original complaint.
Seattle Times – An official appointed to recover the assets of a prominent Manhattan lawyer accused of defrauding hedge funds of at least $400 million says he has safeguarded more than $100 million in assets, including an $18.5 million yacht.
The court-appointed receiver, Mark Pomerantz, outlined his findings about lawyer Marc Dreier and his 150-lawyer firm, Dreier LLP, in a report made public Wednesday in U.S. District Court in Manhattan.
Dreier, 58, was arrested in December on securities fraud charges. He remains under house arrest while his lawyer, Gerald Shargel, prepares what he says is likely to be a guilty plea for his client.
New York (HedgeCo.Net) – Marvin Cooper, who allegedly swindled deaf investors through his money management firm-turned Ponzi scheme, is maintaining his innocence despite new evidence uncovered Monday in federal court.
"Nobody’s been defrauded," Cooper’s attorney, Michael Glenn told the Honolulu Advisor. "We’re working on an amicable settlement in which the investors will get all their assets back."
According to papers filed by federal lawyers, Cooper, who ran Hawaii-based Billion Coupons Inc., may have been planning to hightail it to Panama after attempting to borrow $534,187 by putting his Kaimuki home up as collateral for a mortgage loan. Authorities believe the property was purchased with client funds.
Barry Fisher, the outside receiver appointed to take control of Cooper’s company by U.S. District Judge Michael Seabright, came to this conclusion after conducting a preliminary review of the business. Fisher also found an $80,000 check signed by Cooper which was to be used as a down payment for an $800,000 home in Panama, along with emails discussing his pending move.
Cooper, who is deaf, was charged last month by the Securities and Exchange Commission after allegedly raising $4.4 million by targeting investors in the U.S. and Japan Deaf communities. He then used about $1.4 million of those funds to purchase a new home and other personal expenses.
To gain the trust of investors, Cooper promised substantial returns from investments in Forex markets. Out of the millions, only $800,000 was actually used for Forex trading, with losses exceeding $750,000 from those trades. In typical Ponzi scheme fashion, new money coming in was then used to pay existing investors to keep up the appearance of steady returns. Cooper and BCI also have been hit with fraud charges brought on by the Commodity Futures Trading Commission.
"Being deaf and without the credentials required by the SEC and state regulators, Mr. Cooper focused on gaining access to deaf investors through feeder referrals, which were provided by other Deaf individuals with no investment background in exchange for a referral fee,” explains Joshua R. Beal, Managing Partner at investment advisor firm Schwarz Financial Services LLC. “He followed up with personal visits and calls over the video-phone where he promised returns of 15-25% a month based on automated computer trading programs."
Cooper approached Beal with a call over the videophone in 2007 when he was looking for advice regarding his investment firm. Beal suggested that he should register with the Securities and Exchange Commission; a piece of advice Cooper chose to ignore.
“In 2007 and 2008, several deaf clients of mine along with some community members started telling me that they were having success with Marvin,” Beal recalls. “I contacted the State of Hawaii and the SEC because he did not require a social security number, nor did he employ a custodian or provide a fee statement for his clients.”
Although in most Ponzi schemes, investors rarely receive their money back, authorities are confident that clients will receive some or all of their original investment back, after the assets are liquidated.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – While authorities are trying to locate and freeze all of the assets of admitted Ponzi schemer Bernard Madoff, lawyers representing his wife, Ruth, claim that she has millions in assets, all independent of her husband’s scam.
In an order filed yesterday, it was disclosed that Ruth Madoff owns $45 million in municipal bonds, and a New York City apartment. Ruth also apparently isn’t facing any liquidity crunch; she has $17 million in cash sitting in a Wachovia bank account.
U.S. District Judge Louis Stanton wrote that “some of the assets covered by the relief order are unrelated to the alleged Madoff fraud and only Ruth Madoff has a beneficial ownership in these assets.”
Earlier last month, Bernard Madoff agreed to a permanent freeze on his assets, without admitting or denying fraud charges.
Mr. Madoff has contested that he worked alone, however doubts surfaced when Mrs. Madoff withdrew $15.5 million from a brokerage account in her name in the weeks leading up to her husband’s arrest. The account was with Cohmad Securities Corp., an entity part owned by her husband.
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
Bloomberg - Marc Dreier, the New York lawyer jailed since his arrest for allegedly cheating hedge funds, won’t be able to post the $20 million bond that would free him, his lawyer told a federal judge.
U.S. Magistrate Judge Douglas Eaton in New York today modified an earlier ruling that ordered Dreier held without bail until trial. Eaton required Dreier to have four co-signers and submit to home detention and electronic monitoring. Dreier’s lawyer, Gerald Shargel, said he will probably appeal.
“Effectively, that will keep my client in jail,” Shargel told Eaton, the same judge who set $10 million bail for accused swindler Bernard Madoff, who is charged with running an unrelated $50 billion Ponzi scheme.
Dreier, 58, was arrested Dec. 7 on charges that he persuaded two unidentified hedge funds to give him more than $100 million by falsely claiming he was selling at a discount notes issued by Sheldon Solow, a New York developer. Prosecutors later said “very sophisticated investors” lost $380 million. In a letter to the judge yesterday, they said that the loss topped $400 million.
Dreier, a graduate of Harvard Law School and Yale College, hasn’t formally responded to the wire- and securities-fraud charges. Prosecutors, who arrested Dreier on a criminal complaint, must file an indictment with the court by Feb. 7, Shargel said outside the courtroom.
New York (HedgeCo.Net) – Marcus Schrenker, the pilot turned money manager accused of faking his own death to avoid fraud charges, was transferred from a Tallahassee hospital to a Pensacola jail on Monday.
Schrenker, 38, purposely crashed his single-engine Piper in Florida last week, hoping authorities would confirm his death upon finding the wreckage. Meanwhile, he parachuted over Alabama before the plane started to go down. He was later found at a camp site after reportedly trying to commit suicide.
Schrenker was charged with fraud in Indiana where he allegedly bilked trusting investors out of hundreds of thousands of dollars through his company, Heritage Wealth Management. He also faces federal charges of purposely crashing his plane and placing a false distress call.
Authorities were tipped off when they realized that his distress call did not match up with the scenario. Schrenker had radioed that his plane had suffered a cracked windshield before imploding and causing him severe injury. However, when two rescue helicopters were dispatched along with two fighter jets, they saw that the windshield was not only intact, but the door was open with the pilot clearly missing.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
