Hedge Fund Manager Pleads Guilty To Securities Fraud For Defrauding Investors Of Millions Of Dollars

[nitpicker]

https://www.justice.gov/usao-sdny/pr/hedge-fund-manager-pleads-guilty-securities-fraud-defrauding-investors-millions-dollars

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Friday, October 19, 2018

Hedge Fund Manager Pleads Guilty To Securities Fraud For Defrauding Investors Of Millions Of Dollars

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that NICHOLAS JOSEPH GENOVESE pled guilty today in Manhattan federal court to securities fraud for inducing investments in a hedge fund that he founded, Willow Creek Investments LP (“Willow Creek”), by misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes. In February 2018, GENOVESE was charged and arrested for perpetrating this fraud. Today, GENOVESE pled guilty to one count of securities fraud before United States District Judge William H. Pauley III. As part of his guilty plea, GENOVESE agreed to forfeit more than $13 million of proceeds of the securities fraud, including his interest in two watercraft that GENOVESE purchased with funds that he obtained from his victims.
(snip)

In 2015, GENOVESE began soliciting individuals to invest in the hedge fund that became Willow Creek, which was based in New York, New York. In doing so, GENOVESE represented, among other things, that he was part of the Genovese family that had owned the Genovese Drug Store chain in the New York area and was an heir to this family’s fortune from the sale of that business for hundreds of millions of dollars in the late 1990s; that he had graduated from Dartmouth College’s Tuck School of Business; and that he had extensive Wall Street experience. In particular, GENOVESE claimed that he had been a Goldman Sachs partner and a Bear Sterns portfolio manager before forming Willow Creek. Based in part on these claims, victims invested more than $13 million with GENOVESE.

These representations were false. GENOVESE is not related to the Genovese family that owned and sold the Genovese Drug Store Chain, did not attend the Tuck School of Business, and had never worked for Goldman Sachs or Bear Stearns. GENOVESE also did not tell his investors that he had multiple prior felony convictions for fraud-related offenses including forgery, identity theft, and grand larceny.

When investors began to ask for their money back, GENOVESE put them off. He told one investor that he would only return that investor’s funds after “the stars have aligned,” or else there would be a risk that almost all the money would be lost as a result of the purported impracticalities of unwinding unspecified trading positions. Records indicate that GENOVESE lost approximately $8 million trading in TD Ameritrade accounts between January 2015 and December 2017. GENOVESE also used proceeds of his fraud to purchase various luxury items, including two high-end mahogany boats.
(snip)

[Lucky Luciano]

1. Hard to really call someone a hedge fund manager if they are managing only 13MM.

Not really a hedge fund unless they are managing at least $100MM. You need that much for the fees to pay salaries, rent office space, hire auditors, hire lawyers etc.

13MM is still working out of your garage as a startup even if the business is legitimate.