Globe and Mail – When Mark Bloom was arrested last week in New York for allegedly bilking clients of North Hills Fund, the case marked a new low in the hedge fund world.

Not just because Mr. Bloom had allegedly stolen $13.2-million (U.S.) from investors, sent false financial statements and lied repeatedly about the fund’s holdings. What really galled prosecutors was that Mr. Bloom had secretly invested client money in a Canadian-based hedge fund and then bitterly complained to regulators when the fund manager was charged with stealing money from investors, sending false financial statements and lying about the fund’s holdings.

Then, when a court-appointed receiver recovered the bulk of the money Mr. Bloom had invested in the Canadian fund, he managed to divert most of the money to himself.

"This action demonstrates the length to which unscrupulous individuals will go to defraud investors," said Stephen Obie, acting director of enforcement of the Commodity Futures Trading Commission (CFTC), which filed charges against Mr. Bloom along with the U.S. Attorney’s Office in New York.

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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

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