The Securities and Exchange Commission announced on Wednesday that it had filed an emergency enforcement action to halt an ongoing fraud orchestrated by operators of the New Jersey hedge fund, HMC International, LLC.
The complaint alleges that from late 2001 to the present, Robert M. Massimi, the Fund's manager, and Bret A. Grebow, the Fund's trader, raised approximately $12.9 million from approximately 80 investors through a fraudulent offering of investments in HMC, and that Massimi and Grebow misappropriated more than $5.2 million of these investor funds for their own use.
The Commission alleges that Massimi and Grebow materially misrepresented the Fund as a pooled investment vehicle that engaged in "low risk" day trading.
"Massimi and Grebow sent investors false monthly account statements that portrayed their investments as profitable when, in reality, Grebow was systematically looting the Fund's trading account and Massimi was continually benefiting from lucrative 'profit' distributions and unauthorized expenses that he paid to himself and Grebow from new investor funds," the SEC stated.
The regulator further alleged that Massimi falsely assured investors that he was a hands-on manager, who maintained diligent oversight of the Fund's assets and trading. As he faced increasing investor concerns about the Fund's legitimacy and government inquiries into his misconduct, Massimi also diverted assets to others, including his wife, Jaime Elliott, who has been named as a "relief defendant" by the SEC.
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