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On February 25th, a man named James M. Nicholson was arrested for, allegedly, running a $900 million hedge fund investment fraud. The Securities and Exchange Commission (SEC) has accused the 42-year-old, of securities fraud and bank fraud.

Nicholson managed a hedge fund under his company Westgate Capital Management LLC of Pearl River, NY, which is not registered with the SEC. The fraudster, allegedly, convinced investors to hand over money with misleading and untrue sales material and outright lies, much like the recently infamous Allen Stanford. He fallaciously told investors he managed assets totaling $600 to $900 million and he produced fake financial statements through a fake accounting firm he dreamed up called Havener & Havener.

According to the SEC, since 2004 the schemer swindled nearly $900 million from naive investors. Soon after Bernie Madoff's Ponzi scheme was busted, Westgate investors, like many others, began to worry and attempted to retrieve their investments. When checks started to bounce in December the SEC began an investigation. To date, about 24 checks written to investors, totaling nearly $5 million, have bounced. In addition to the bounced checks other investors have unsuccessfully attempted to recover more than $10 million from Nicholson.

Nicholson is being represented by Madoff's attorney Ira Sorkin and is currently under house arrest with bail set at $10 million.

Investment Fraud Attorney

Investment fraud can be difficult to recover from on your own. If you have been decieved by a crooked hedge funds manager a securities attorney can help you recover lost investments. Contact an experienced securities attorney at Arnold & Itkin LLP for a free consultation.

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The Securities and Exchange Commission (SEC) has charged a Florida hedge fund manager with fraud, claiming he overstated a total of six funds by approximately $300 million.

Arthur Nadel disappeared on January 14, just one day before he was expected to repay $50 million to investors who had caught on to his scam. He left a suicide note claiming he felt "extreme guilt over taking business actions" that resulted in the loss of his investors' money.   A week after the suicide note was found, Nadel, according to Forbes, called his wife from New Orleans, Louisiana. The call was traced by police officers who are now on the hunt for yet another investment manager who has decamped with investor millions.

According to the SEC complaint, more than a million dollars from two of the hedge funds were transferred to several bank accounts controlled by Nadel. Nadel has been the director and president of Scoop management, and has managed hedge funds, since 1999. He had been managing a total of six funds for about 600 investors.  The hedge fund scam seemed to have been going on for at least a year, during which time he inflated the value of the investment to $300 million. In reality, the value of the funds is closer to $500,000. Nadel also posted returns that the SEC says in its complaint, were blown out of proportion. Two of his hedge funds actually lost money during the reported time and another posted returns that were lower than he reflected. Since his disappearance, at least 45 people have filed complaints about him.

The financial meltdown does have a silver lining – it has begun to quickly expose fraudsters like Bernie Madoff and Arthur Nadel who would, in a healthy economy, have hidden in the woodwork and continued their Ponzi schemes.

Hedge Fund Fraud Lawsuit

There's nothing more frustrating than handing over your hard earned money to an investment broker or manager and learning, all too late, that those juicy digits at the bottom of your returns sheet are actually nowhere near that bloated number, and are quite likely, much lower than you thought. The task of pursuing claims against these advisors and managers is just as frustrating. It helps to rely on an expert hedge fund fraud attorney to make a claim so you can begin recovering your investment.

If you have lost money in a hedge fund investment fraud, contact an experienced investment fraud lawyer at Arnold & Itkin LLP for a free consultation.

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