Skip to main content

Running a hedge fund fraud requires a certain degree of callousness towards one’s victims, a willingness to cause them a certain amount of pain to achieve one’s own ends—generally nice cars and even nicer vacations. In some cases, these victims are not particularly sympathetic individuals. In other cases—indeed, in most cases—they rather are: the elderly, one’s fellow parishioners, the hopelessly stupid. And yet, even in that strong field, Queens’ own Dean Mustaphalli has really distinguished himself.

Mustaphalli’s brazen scheme primarily targeted elderly New Yorkers, most of whom were immigrants or female, and who had been his clients for many years. These victims had very little investment experience and relied upon his advice. As their investment advisor, Mustaphalli knew his victims’ conservative investment objectives and that many of them were planning for retirement. Nevertheless, without their knowledge and consent, Mustaphalli diverted his victims’ safe investment portfolios into MCPF, a hedge fund he solely controlled. Many of these illicit transfers were made at his victims’ most vulnerable moments, such as after the loss of a child or spouse, during a divorce, or while battling an illness.

And that? That’s not even the worst of it. To pull it all off, Mustaphalli brazenly ignored the definition of “accredited investor.”

He also forged his clients’ initials next to the portion of the documents entitled “Accredited Investor Status,” which falsely stated that each investor’s net worth was over $1 million, when, in reality, almost none of Mustaphalli’s clients had a net worth of over $1 million.

Well, he won’t be initialing any such documents for a little while at least.

Mustaphalli was sentenced to 3 to 9 years in prison; paid $260,000 in criminal restitution; and signed confessions of judgment in favor of the victims named in the indictment, totaling more than $2.3 million dollars.

Attorney General James Announces Criminal Conviction and Civil Judgment Against Queens Investment Advisor for Defrauding Elderly Clients of Over $11 Million [press release]


By Chris Potter (Flickr: 3D Judges Gavel) [CC BY 2.0], via Wikimedia Commons

Older Brother Sells Out Younger Brother In Alleged Crypto Hedge Fund Fraud, But Notes That Real Villain Is SEC

If they’d just unfreeze those assets, his little bro would quickly get them back to his alleged victims, he’s pretty sure.

Death-Faking Hedge-Fund Fraudster Super Busy Right Now

Mark Malik knows what we're talking about.

Dan Loeb Will Have His Scalp, And Spinoff, Too

Dow Chemical's CEO knows what we're talking about.