Two Money Managers Accused of $550 Million Fraud
Posted by Media Outrage on February 26th, 2009
Yo this sh*t is out of control! Two money managers were arrested yesterday (Wednesday) for allegedly running an estimated $550 million decade long swindle. Smh.
Via Reuters:
Two money managers who oversaw investments for Carnegie Mellon University and other institutions were arrested on Wednesday on charges of running an estimated $550 million, decade-long swindle, the latest in a wave of big financial fraud cases.
Paul Greenwood, 61, and Stephen Walsh, 64, managing general partners of broker-dealer WG Trading Co with main offices in Greenwich, Connecticut, were charged by U.S. prosecutors with conspiracy, securities fraud and wire fraud.
The pair, both former part-owners of the New York Islanders National Hockey League team, are accused of using client money as “their personal piggy-bank” to fund lavish lifestyles, according to the U.S. Securities and Exchange Commission.
The SEC and the Commodity Futures Trading Commissionbrought civil charges against the men and their companies, which also include WG Trading Investors LP and investment adviser Westridge Capital Management Inc in Santa Barbara, California. The SEC obtained a court-imposed asset freeze against the men and their affiliated entities.
The two men appeared in U.S. Magistrate’s Court in Manhattan where a judge set bail at $7 million to be secured by $1 million in cash or property not from proceeds of the purported fraud. The judge imposed travel restrictions. They did not enter a plea and were freed, but were ordered to meet the bail conditions by March 11.
Their lawyers declined to comment.
The charges come amid a wave of fraud cases involving money managers. The biggest case involves former Nasdaq Chairman Bernard Madoff, arrested in December and charged with fraud after authorities said he confessed to running a Ponzi scheme with losses of up to $50 billion over many years.
Greenwood and Walsh were arrested by the FBI on Wednesday morning, two weeks after their suspension by the National Futures Association for not complying with an audit.
A woman who answered the phone at a WG Trading office in North Hills, New York, declined to comment. There was no answer at the firm’s main office in Greenwich.
HORSES, COLLECTIBLES
Authorities contend the scheme began in 1996 and operated through this month. Of the $667 million that clients invested, Greenwood and Walsh misused as much as $554 million, the SEC said.
Greenwood, of North Salem, New York, was accused of using investor funds to buy items including horses and expensive collectibles, while Walsh, of Sands Point, New York, was accused of using client money for himself and to make large payments to his ex-wife.
The SEC complaint said other spending included multimillion-dollar homes and cars.
The purported scheme targeted institutional investors, including educational institutions and public pension plans, by promising to invest their money in an “enhanced equity index” strategy, the SEC said. Instead of investing the money as promised, they stole investor funds for their personal use, the commission said.
Greenwood and Walsh had been suspended by the National Futures Association on February 12 for not disclosing financial records and failing to answer questions about promissory notes “totaling hundreds of millions of dollars.”
The SEC said that as recently as February 6, Greenwood and Walsh had received a $21 million investment from the University of Pittsburgh, which had been a client of Westridge since 2002 and has about $65 million invested with the money managers.
Also Wednesday, former WG Trading employee Mark Bloom was charged with fraud by criminal prosecutors and the SEC, related to his activities at his North Hills Management LLC financial firm in New York.
Bloom stopped working for WG Trading in 2001, according to the court papers. The SEC said he misused more than $13.2 million of North Hills investor funds. His lawyer could not immediately be reached for comment.
Mediaoutrage- Yo this country was built on greed, thievery and free labor. The financial elements of this nation still run smoothly on GREED, and THIEVERY . It’s really time to put these people away for life.
February 26th, 2009 at 3:42 pm
PPl have been scheming before tha recession. Their getting caught now, cause businesses is loosing money left 2 right.
Word 2 tha wise, what is done in the dark will come 2 light. Its not what you do, its how you do it.
They been scheming since 1996. Which is over 10years. That’s what you get 4 being greedy old coons.
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February 26th, 2009 at 4:33 pm
Can you imagine investing your money for long term, just so you can have a nice nest egg when you retire. Finding out someone stole what’s your life saving would allow anyone to just kill the person or persons responsible. Seriously I am against the taking of a life, but when you look at faces of some of these people being swindled my heart goes out to them and makes me angry enough to have murderous thoughs of my own…. I will not be suprise to hear on the news of someone going beserk and killing the people they trusted with their life savings. I keep checking my 401k,and how it’s being invested. I tried calling to close my account and get my money but was advised it would cost me a hugh penalty for early withdrawal,unless I am rolling it over to another outside investment firm…. I don’t trust anyone with anything right now…. I am also considering taking my savings out of the bank.. And do as my great grandparents,put it in the walls and bury it in the backyard…
This is some scandalous shit… Lowlife bastards.
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February 26th, 2009 at 5:16 pm
They need to be prosecuted to the fullest extent of the law, and they don’t need to go to the Federal Pen either!!!
SMDH
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February 26th, 2009 at 5:24 pm
This some file ish!!! Let them stealing asses dig their
own caves or leave them in a room alone with the ones
they robbed…
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February 26th, 2009 at 5:25 pm
I meant foul not file… Doing too much at one time.. lol
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February 26th, 2009 at 6:22 pm
When they steal they don’t fool around with chump change. $550 million!!!!! Madoff was in the billions.
I agree with “Yeah I Said It Says”….now you see why some people walk up in places and kill people or kill themselves, not that it’s right, but damn.
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February 26th, 2009 at 10:39 pm
Fucking bastards! This shit needs to be stopped for real!
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