Call it Madcap Monday, but today there are several stories vying for attention in the non-stop world of hedge fund crime. Here is a summary:
Galleon Trial
The case is about to go the jury. It was expected that U.S. District Judge Richard Holwell would instruct the jury following the final rebuttal by the prosecution. This after John Dowd, lawyer for Raj Rajaratnam, spent over five hours delivering his closing argument. His basic thesis: Rajaratnam did "nothing wrong." Rajaratnam is looking at decades of hospitality at the Big House should he be convicted.
On another front in the Galleon case, Jason Goldfarb, a lawyer, pleaded guilty on Thursday to securities fraud and conspiracy for his role in buying confidential information from two other lawyers in his firm, Ropes & Gray. Goldfarb can now avoid a trial that was slated for mid-May and that features Zvi Goffer, a former Galleon trader. Arthur Cutillo and Brien Santarlas, the two Ropes & Gray lawyers, have already pleaded guilty to accepting money in exchange for information. Goldfarb is looking at a three-to-four year vacation at the Graybar Hotel when he receives his sentence on August 19.
Petters Ponzi Scheme
David Harrold and Bruce Prevost, of Palm Beach Capital Management, have pleaded guilty to lying to investors about the Thomas Petters Ponzi scheme, only 20 days after their indictment. Both men can be stamping out license plates for the next 20 years following sentencing. Palm Beach is accused of secretly swapping out old Petters promissory notes for new ones. Palm Beach contributed over $1 billion to the Ponzi scheme. Thomas Petters, the ringmaster, will be savoring prison cooking for the next 50 years following his jury conviction.
Amaranth Advisors
Brian Hunter was fined $30 million by the Federal Energy Regulatory Commission (FERC) for trying to manipulate the natural gas futures market. Hunter oversaw the spectacular collapse of the Amaranth Advisors hedge fund four years ago. Hunter is declining to pay, stating his Canadian citizenship and what he terms the FERC's lack of jurisdiction over futures markets. Hunter will appeal FERC's finding that Hunter sold futures "with the intent to depress prices and financially benefit his significant derivatives positions held on other platforms."
The Commodity Futures Trading Commission (CFTC) is suing Hunter over the same charges. Amaranth settled CFTC and FERC charges two years ago by paying a $7.5 sum, but Hunter was excluded from that settlement.
Phidippides Capital Management Ponzi Scheme
He's already doing ten years in prison. Now, Mark Trimble, former hedge fund manager at the Phidippides Capital Management Ponzi hedge fund is looking at decades more of incarceration. Prosecutors are now accusing Trimble of wire fraud, mail fraud and money laundering in connection with ripping-off his bicycle coach and of violating a ban against trading. Trimble apparently invested $111,000 of his coach's money, losing $40,000 in the process. Trimble could spend another 30 years behind bars.
© 2011 Hedge Fund Writer LLC
