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There are so many things one can do with the proceeds of a hedge-fund fraud. You can buy enough teddy bears (and an appropriate place to keep them) to make you feel as safe and cuddly and loved as necessary. You can buy a one-of-a-kind Wu Tang Clan album. You could have the greatest weekend of your life in Las Vegas hanging out with Leonardo DiCaprio. You could drop six figures on tattoos and booze and getting your cat the most bitching grooming of all time and also some “firearms-related expenses.”

Of course, most fraudsters are much more prosaic than that, spending their ill-gotten gains on mortgage payments or credit-card bills or the kind of things that generally get written off as “lavish lifestyles” in Justice Department press releases: private jets, opulent vacations, over-the-top parties, shopping sprees, one’s weight in caviar and, of course, luxurious and very fast cars.

And, at first glance, that’s what it looks like Andrew Franzone spent the $40 million he allegedly stole from investors on. After all, before his indictment for allegedly lying to investors about how he was investing their money and how those investments were doing, among other things, Franzone told The Wall Street Journal just how he used his disposal income: the 1965 Daytona 500-winning ride, Toyota’s first-ever NASCAR-winning entrant, etc.

But that’s not what he spent his alleged skimmings from 2014 until 2019 on, nor on a house, apparently, as the SEC notes, “currently does not acknowledge having a fixed residential address but who generally can be found in the Miami, Florida area.” No, instead, Franzone is accused of doing this with it:

Franzone, a racing aficionado, diverted most of the money into high-risk, illiquid private investments. He also lied to investors about the fund’s performance and assets under management and diverted some of the money for his personal use, including the hangar for his cars.

An airplane hangar, not for his private jet, but for his race car collection! Now that is the way to throw down someone else’s money in style. That said, if you’re in the market for an airplane hangar, or indeed for the kinds of cars someone might keep in an airplane hangar, get in touch with the U.S. Marshals Service, as Franzone may not have much need of them for a while.

Franzone faces a maximum potential sentence of 20 years in prison.

Hedge Fund Manager Accused of Bilking Clients for Race Car Hobby [Bloomberg]

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