HedgeCo.Net (West Palm Beach) – Michael Lauer and four other men have been indicted after defrauding investors out of more than $200 million, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney R. Alexander Acosta of the Southern District of Florida announced yesterday. The indictment includes one count of conspiracy to commit mail, wire and securities fraud and six counts of wire fraud.
Lauer, a New York based hedge fund manager who ran the The Lancer Group, is accused of manipulating the closing market price of thinly-traded Florida based shell company securities to falsely inflate the value of the The Lancer Group’s hedge funds.
According to the charges, Lauer bought large amounts of restricted stock for pennies a share through private transactions. Lauer, along with Martin Garvey and Eric Hauser, who were co-owners of the fund’s management company, then directed brokers to buy these same securities for the hedge fund at a much higher open market price while making additional small purchases to drive up the price. This manipulation resulted in the securities to close at a much higher price, which in turn jacked up the performance fee paid to the managers. This lured new investors in and kept current investors satisfied.
Lauer then allegedly created fake portfolios of the securities supposedly held by the Lancer Group and was provided falsely inflated appraisals of the shell companies through his Boca Raton partners, Laurence Isaacson and Milton Barbarosh.
If convicted, all five men could face a maximum of 20 years in prison for the wire fraud, up to 5 years for conspiracy, and up to a half million dollars in fines.
Julie Scuderi
Contributing Editor for HedgeCo.Net
Email: [email protected]
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