The US Securities and Exchange Commission (SEC) on Monday obtained an asset freeze and other emergency action to stop a USD30mn hedge fund fraud by a San Diego-area investment adviser, Plus Money, Inc.
The SEC's complaint alleges that since at least May 2004, Plus Money and its principal, Matthew La Madrid have managed hedge funds (the Premium Return Funds) that raised more than USD30mn from approximately 300 investors, by telling them that the funds would engage in a covered call options trading strategy.
Unbeknownst to investors, Plus Money and La Madrid allegedly abandoned the covered call trading strategy in the fall of 2007, emptied the money out of the Premium Return Funds' brokerage accounts, and dissipated the money through a series of illicit transfers.
Plus Money initially failed to make monthly payments to the Premium Return Funds' investors in February 2008.
"Our complaint alleges that the defendants defrauded unsuspecting investors in a purported hedge fund," explained Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.
"This action reaffirms the Commission's commitment to taking emergency action when necessary to freeze ill-gotten gains for the protection of investors," she added.
Rosalind R. Tyson, Acting Director of the SEC's Los Angeles Regional Office, went on to explain that:
"As alleged in our complaint, La Madrid and Plus Money defrauded investors when they made undisclosed transfers of investor funds which were rapidly dissipated. In such cases, we are determined to act quickly to halt ongoing violations and freeze any money for the benefit of wronged investors."
On 28th April, the SEC filed an emergency action to halt the ongoing fraud. The Honorable Roger T. Benitez, US District Court Judge for the Southern District of California, issued an order on 30th April freezing the assets of the defendants and the relief defendants.
The SEC's complaint alleges that investors were not told that in the fall of 2007, La Madrid and Plus Money transferred nearly all of the money from Premium Return Funds' brokerage accounts to Vision Quest Investments, a La Madrid-controlled account, which in turn transferred USD10mn to relief defendant Palladium Holding Company.
The court issued an order temporarily enjoining defendants from future violations of the antifraud provisions of the Investment Advisers Act of 1940.
The court also issued orders temporarily freezing the assets of the defendants and relief defendants, and prohibiting the destruction of documents by the defendants.
The Premium Return Funds, six additional entities managed by Plus Money, Donald Lopez of Denver, Colo., and Palladium Holding Company, an entity formed and controlled by Lopez, are named in the complaint as relief defendants, based on their receipt of investor funds.
The Commission's complaint seeks preliminary and permanent injunctions, return of ill-gotten gains with prejudgment interest, and penalties against the defendants.
The complaint also alleges that the defendants transferred significant amounts of investor monies to the relief defendants, and seeks the return of those monies.
A hearing on whether a preliminary injunction should be issued against the defendants is scheduled for 14th May.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment