The Week In Hedge Fund Fraud

matthew tannin.jpgRalph Cioffi.jpgAdmit it: You’re bummed that the Bear Stearns fraud trial has ended in a flash of prosecutorial incompetence and 12 potential clients for Ralph Cioffi and Matthew Tannin. We are, too. But fear not, friends, there’s an embarrassment of hedge fund fraud riches out there to continue to follow, and we thought we’d offer a Readers’ Digest of the (alleged) scams and scandals still making news.
Madoff: Let’s start with the mother of them all. Bernie may be moldering away in Butner with the homosexual posse, but the fallout from Ponzi scheme to end all Ponzi schemes* continues. Last week, Madoff’s storefront accountant pleaded guilty to fraud, obstruction and false filings. But the court battles aren’t over: Swiss authorities have charged the former head of Banco Santander’s fund of hedge funds arm with criminal mismanagement for overseeing its $3.5 billion in Madoff losses.
Irving Picard is still busy, too. The court-appointed receiver, who said he’s promised to pay out $534 million to Madoff’s victims, has been forced to cut his claim against Madoff feeder fund magnate Ezra Merkin by one-third to $564 million. And then there’s the aftermath of the death of Madoff buddy and Picard target Jeffry Picower.

Galleon: Oh, where to begin? The daily ID of a new conspirator or insider-information source? The former Moody’s analyst who’s been indicted and gone missing? The scrupulousness of two of the government’s star witnesses? Yet another hedge fund ensnared? The possible SAC Capital connection? The future of Galleon’s staff?
Dreier: The Feds have won a couple of guilty pleas from two other members of disgraced lawyer Marc Dreier’s acting troupe.
Petters: The anti-Bear case, which seems to be going swimmingly for the government out in the Twin Cities. Prosecutors have put on a whole slew of witnesses that put Minnesota businessman and hedge fund manager at the center of a $3.5 billion Ponzi scheme. Oh yea, and Petters’s lawyer thinks the judge is conspiring against him. Always a good sign.
K1: Würburg’s favorite psychologist-cum-hedge-fund-manager lost his bid for release. Seems the court just doesn’t believe that Helmut Kiener an attaché at the embassy of Guinea-Bissau in the Netherlands. His lawyer is also railing against the “witch hunt” against his client based on “unfounded” claims from the banks who he allegedly ripped off to the tune of $400 million. And, you know, might have caught him.
Meanwhile, K1’s British Virgin Islands-based fund is going out of business, and one of Kiener’s alleged coconspirators has pleaded not guilty right here in the U.S. of A.
Nadel: Another six investors in Arthur Nadel’s alleged Ponzi scheme have returned their ill-gotten gains. The man himself remains in a New York City jail cell, awaiting trial.
The lesser frauds and alleged frauds: One hedge fund manager indicted for insider-trading, another for theft. A jet-setting hedge fund manager who wildly inflated his reported returns cops a plea. A lawsuit against yet another Ponzi schemer.
* did not actually end all Ponzi schemes

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39 Responses to “The Week In Hedge Fund Fraud”

  1. guest says:


  2. guest says:

    also a new one in Ft Lauderdale that could be pretty big.

  3. guest says:

    You’re using the terms “hedge fund” and “fraud” way too loosely. And while a weekly summary is a nice idea, today is Wednesday, isn’t it?
    Please consider re-writing this post.

  4. mrpink says:

    Cioffi looks so regal in that pic.

  5. guest says:

    Too many links, didn’t click.

  6. NotNasser says:

    And there’s the question of whetrher Bermuda is going to help or impede Picard’s efforts to collect some cash for Madoff victims.

  7. guest says:

    why do you find so many frauds in hf land when you find so few in pe land…just saying

  8. ValensVisionFraud says:

    Disappointed in the performance of the Valens US Fund, managed by David and Eugene Grin? Disappointed in the promises regarding the fund’s liquidity? Wary of the the managers’ promises about the value of PetroAlgae? Wary of the managers generally? Interested in joining other disgruntled investors?

    Disappointed in the performance of Vision Opportunity Capital Partners, managed by Adam Benowitz? Wondering what the SEC is up to in investigating this fund? Wondering what it was Mr. Benowitz has been up to to attract the attention of the SEC? Interested in joining other disgruntled investors?

    If so, please email and we will get back to you to discuss options regarding these renegade managers.

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