Head of Hedge Fund Real Estate Sham Pays the Price
Friday, August 29, 2008 : PermalinkNew York (HedgeCo.Net) – A published author and notable hedge fund manager has seen his charade finally come to a halt. Mark Boucher of Portola Valley, California, who wrote “The Hedge Fund Edge,” has agreed to pay $100,000 in penalties after misleading investors in a $20 million real estate scam. In addition to the monetary penalties, he is barred from acting as an investment advisor for the next five years.
According to reports by the SEC, Boucher pushed two investments supposedly backed by real estate onto his investors via his monthly newsletter, garnering around $20 million from 1999 to 2005. The two companies, however, had little to do with the real estate sector. One company had no property in its portfolio, while the other company owned a single property that was mired in debt. Neither firm was known for successfully developing any real estate.
The money was apparently going to Gary P. Johnson and John Brake, owners of the two companies. The pool of investor money afforded the three men their own home mortgages, luxury cars and start up capital for other business ventures. Johnson agreed to return $1.8 million from commissions he received, as well as pay over $820,000 in penalties and interest, all while denying the allegations brought against him. Brake, who has also been accused of securities fraud, has not reached a settlement yet with the SEC.
"Boucher lured clients into these fraudulent real estate deals by exploiting his reputation as a successful hedge fund manager," stated Marc Fagel, Director of the SEC’s San Francisco regional office. "Johnson and Brake failed to develop the projects, instead diverting millions of dollars of investor money to finance their lavish lifestyles."
An editorial review of his book states, “The Hedge Fund Edge melds market timing, vehicle selection, risk management techniques, economic insight and understanding, and tactical asset allocation into a totally new philosophy and approach that has been proven to produce spectacular gains with relatively low risk.”
Clearly, that formula needs to be reworked.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
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