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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  Other funds from the pool were withdrawn by Hudgins to pay for his extravagant lifestyle, which included Tiffany jewelry, antique sports cars, real estate and a plane.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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Tags: account statements, accredited-investors, cftc, commodity pool, embezzlement, extravagant lifestyle, federal prison, futures-and-options, hedgeco, hudgins, money-laundering, ponzi scheme, pool operation, prison julie, sports cars, stellar performance, tiffany jewelry, wire-fraud

New York (HedgeCo.Net) – Two high-ranking men who worked in the New York State comptroller’s office were arrested yesterday after it was discovered they took millions of dollars in kickbacks from private equity and hedge funds, said Attorney General Andrew Cuomo.

David Loglisci, who was the top investment officer of the state’s $122 billion pension fund, along with Henry Morris, who fund-raised for former comptroller Alan Hevesi, were nailed in a 123-count indictment, which included charges of money laundering, securities fraud and bribery.

It was discovered that over 20 transactions made by the pension fund involved kickbacks, with five of those coming from the renowned private equity fund The Carlyle Group. 

Morris, who was released after posting a $1 million cash bail, allegedly received $13 million from The Carlyle Group, from investments that totaled $730 million.

“Morris used the fund as his own piggy bank and took approximately $30 million in fees for himself and his business partners on investments which Morris himself had a role in approving,” Cuomo said.

Lawyers for both men contend their clients are innocent, saying that all of the transactions benefited the pension fund and were agreed upon by outside financial institutions.  The Carlyle Group has stated they have “fully cooperated with the New York Attorney General’s Office and is not a target of the investigation.”

If convicted, both men could face a life sentence in prison.

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   

Tags: accredited-investors, alan hevesi, attorney-general-andrew-cuomo, carlyle-group, count indictment, david loglisci, financial-institutions, henry morris, investment officer, kickbacks, new york state comptroller, new-york-attorney-general, pension-fund, prison julie, private equity fund, securities fraud, target, york state comptroller, york-attorney