Brooklyn, NY - Feds: Two Arrested On Securities Fraud Charges
Brooklyn, NY - A New York man who told investors he was president of a hedge fund called ARC was really a hired driver, according to court documents on Friday in which he and two others were charged with fraud.
The self-described president of ARC, A.. and D.., a purported manager at the fund from 2002 until it closed in February 2006, were arrested on Thursday night. The third accused, A nephew G.., is at large.
All three were charged with securities fraud and wire fraud, according to criminal complaints filed in Manhattan federal court.
“The primary occupation of the president of ARC, was as a livery driver, and the president had very little investment experience prior to starting ARC,” according to one court document citing L. testimony to the U.S. Securities and Exchange Commission in November 2006.
A’s lawyer Arthur Gershfeld declined comment after his client was released on $700,000 bond when he made an initial appearance on Friday. The judge also ordered L. to be released on $500,000 bond.
A.., who told investigators he once ran a successful transportation business, testified to the SEC in October 2006 that the fund never focused on real estate or leveraged trading as had been spelled out in a publicity brochure.
A special agent of the FBI said in the complaint that ARC, which allegedly sent out phony statements, actually raised $14.9 million from individual investors in the fund. About $12 million was wired to various bank accounts in Ukraine, the complaint said.
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