Millions Pocketed by Hedge Fund Managers

Jack Humphrey, Regulatory journalist
December 24, 2010 /

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.


2 Comments for “Millions Pocketed by Hedge Fund Managers”

  1. Anonymous

    The hedge fund industry needs to be cleaned up or shut down. These endless frauds are indicative of structural flaws in regulatory requirements for this industry which allow for criminal operations to flourish, seeming for no good reason other than this industry being a rich boy’s club which gets free passes not allowed to any other financial sector which is required to adhered to rules and regulations. Enough is enough.

    • Anonymous 2

      The SEC’s goal is to do whatever it can to shut down these smaller companies in order to make their job easier, even by fabricating allegations to do so. The bigger companies are just as guilty, if not of more so fraud, but they just pay a large fine funded by taxpayer money and nothing ever is publicized about the fraud. One the SEC get’s the smaller companies shut down all they’ll have to do is make allegations again these larger companies and they’ll just pay the fines and the SEC will be fat and happy. Our govt is so corrupt it’s sickening.

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