Guy Who Ripped Off, Lied To Kim Kardashian's 72 Day Husband Pleads Guilty

Remember Andrey Hicks? To recap, he's the guy who was arrested last year (trying to make a run for Switzerland) and had his assets frozen by the Securities and Exchange Commission, which took issue with the fact that, in addition to stealing a couple million from investors in his Locust Offshore Management fund, he'd fed them a "brazen web of lies" that included: the claim he received a Ph.D in Applied Mathematics from Harvard in two years (he neither earned his doctorate from Harvard nor his undergraduate degree and in fact only lasted three semesters in Cambridge, taking a single math course, in which he got a D-); the claim that while working at Barclays Capital, he increased his group's assets under management to $16 billion, despite BarCap having no record of his employment; the claim that at Locust, he applied "quantitative strategies based on mathematical models he developed at Harvard"; the claim that Ernst & Young was the fund's auditor, Credit Suisse its prime broker and custodian, even though the SEC report was the first either had heard of the guy. Anyway, he's probably going to spend some time in jail.
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Remember Andrey Hicks? To recap, he's the guy who was arrested last year (trying to make a run for Switzerland) and had his assets frozen by the Securities and Exchange Commission, which took issue with the fact that, in addition to stealing a couple million from investors in his Locust Offshore Management fund, he'd fed them a "brazen web of lies" that included: the claim he received a Ph.D in Applied Mathematics from Harvard in two years (he neither earned his doctorate from Harvard nor his undergraduate degree and in fact only lasted three semesters in Cambridge, taking a single math course, in which he got a D-); the claim that while working at Barclays Capital, he increased his group's assets under management to $16 billion, despite BarCap having no record of his employment; the claim that at Locust, he applied "quantitative strategies based on mathematical models he developed at Harvard"; the claim that Ernst & Young was the fund's auditor, Credit Suisse its prime broker and custodian, even though the SEC report was the first either had heard of the guy. Anyway, he's probably going to spend some time in jail.

Andrey Hicks pleaded guilty to five counts of wire fraud before U.S. Federal Judge Patti Saris in Boston, admitting that he had stolen $2.3 million from 10 people who believed he was investing the money into his firm, Locust Offshore Management. He was arrested last year while trying to flee to Switzerland. An attorney for Hicks could not immediately be reached for comment. Hicks is scheduled to be sentenced on March 6, 2013 and faces up to 20 years in prison. In March, a federal judge ordered him and Locust Offshore to pay back $2.5 million with interest plus pay more than $5 million in penalties. Hicks' story garnered media attention partly because National Basketball Association player Kris Humphries, the former husband of reality TV star Kim Kardashian, had invested money with Hicks, a government source familiar with the matter said at the time.

U.S. man pleads guilty to wire fraud in hedge fund scheme [Reuters]
Earlier: Securities And Exchange Commission Not Amused By Hedge Fund Manager’s “Web Of Lies”

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Now Here Are Some Guys Who Knew How To Rip Off A Client

One aspect of good salesmanship is that you have to offer an attractive proposition not merely to the abstract entity that is your nominal client - El Paso, Italy, Greece - but also to the specific human being who is your contact at that client. Telling a corporate treasurer who is five years from retirement that a trade will have a significantly positive NPV due to huge cash flows in years 11-15 is not always as effective a sales technique as buying him a nice steak and an evening of unclothed entertainment. I suspect, though, that the latter strategy is more highly correlated with whatever you're selling ending up on the front page/op-ed page/sec.gov. Anyway, I definitely admire these guys for this particular con*: The SEC alleges that Argyll Investments LLC’s purported stock-collateralized loan business is merely a fraud perpetrated by James T. Miceli and Douglas A. McClain, Jr. to acquire publicly traded stock from corporate officers and directors at a discounted price from market value, separately sell the shares for full market value in order to fund the loan, and use the remaining proceeds from the sale of the collateral for their own personal benefit. Miceli, McClain, and Argyll typically lied to borrowers by explicitly telling them that their collateral would not be sold unless a default occurred. However, since Argyll had no independent source of funds other than the borrowers’ collateral, Argyll often sold the collateral prior to closing the loan and then used the proceeds to fund it. Got it? Argyll gave corporate executives margin loans at 50-70% loan-to-value based on the market price of their stock (based on the volume weighted average price over five days leading up to the closing of the loan). They took the stock as "collateral." They then trousered the stock and sold it for, y'know, 100% of the market value, with 50-70% of that funding the loan and the remaining 30-50% funding miscellaneous expenses that presumably included unclothed entertainment for themselves. The loans had three-year terms and were not prepayable for 12-18 months, so the expected life of the scam was at least 12 months (but see below).