Millions Pocketed by Hedge Fund Managers
Four hedge fund managers from the defunct Arcanum Equity Fund, LLC and Vestium Equity Fund, LLC have allegedly steered millions of dollars to themselves in a fraudulent scheme that promised investors of high returns.
The Securities and Exchange Commission implicated in its lawsuit hedge fund managers Robert Buckhannon, Terry Rawstern, Dale St. Jean and Gregory Tindall, enjoining them for the three separate fraudulent offerings they entered with 101 investors from USA and Canada. The lawsuit also pointed the involvement of Vestium Equity Fund’s investment adviser – Imperium Investment Advisors, LLC, including its principals Richard Mittasch, Christopher Paganes and Glenn Barikmo – in the fraudulent scheme.
According to SEC’s lawsuit, the hedge fund managers promised their investors that they would generate high returns from high-grade debt instruments and limited physical commodities transactions in conservative investments. Imperium Investment Advisors also assured the investors of the safety of their funds from unauthorized uses. After succeeding to solicit funds from investors, the hedge fund managers used the accumulated amount for illiquid private investments and loans to affiliate entities.
The fraud has been running for two years, since April 2008 to April 2010, the SEC said.
The complaint further alleged that the hedge fund managers falsely inflated the profits and asset values in their monthly statements, paying the investors at least $6 million and themselves more than $1.3 million despite the funds’ losses of at least $8.1 million. The hedge fund managers have misappropriated at least $734,000, the SEC claimed.
The hedge fund managers will be disgorged of their ill-gotten gains with additional civil fines and prejudgment interest. Buckhannon will pay a total of $1,369,176 while Rawstern have also consented to SEC’s settlement, but the figures are yet to be disclosed.
The hedge fund managers are subjected to an injunctive relief.