Hedge Fund Fraudster Pleads Guilty

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Sometimes we wonder how hedge fund managers are able to convince sophisticated, wealthy people to hand over vast fortunes for the managers to invest. Then we remember Hakan Yalincak, the NYU senior arrested last year for defrauding investors out of millions of dollars. The investors thought they were buying into a hedge fund, which Yalincak called the Daedalus Capital Relative Fund I. In realty Yalincak was running nothing more than a Ponzi scheme backed up with creative check-kiting. Yesterday he pled guilty to the charges against him.
Yalincak constructed a fable about family wealth from Turkey, as well as support from wealthy foreign supporters, to convince investors to hand over millions. In order to support the mirage of wealth, his pledged $21 million to NYU to create a professorship in Ottoman studies. Of course, he didn't have $21 million and gave NYU just one installment of $1.25 million, which prosecutors believe was money investors were told was being contributed to the hedge fund.
The hedge fund never actually existed. He just paid out old investors with money coming in from new investors, and pumped up the funds balance sheets by writing bad checks.
We can't help but feel that the real shame of it all is that, like so many other good con men, this kid might have had a future in investor relations if he had just attached himself to a real fund. He's obviously good at getting the wealthy to part with their wealth; he just didn't have a plan to invest it or get the money back to them.

NYU Scammers Lesson
[New York Post]

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