Industry Updates

SEC recovers $229.4m from Ponzi schemer Francisco Illarramendi

Thursday, June 30, 2011

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Opalesque industry update – On Tuesday, The Securities and Exchange Commission (SEC), the U.S. securities watchdog, revealed it had recovered some $229.4m from an offshore fund held by Francisco Illarramendi and his firm Highview Point Partners LLC, which managed three hedge funds, according to Reuters.

Illarramendi, the 42-year-old Connecticut-based hedge fund manager pleaded guilty in March to running a multiyear Ponzi scheme that defrauded investors of hundreds of millions of dollars. He pleaded guilty to five criminal counts including securities fraud, wire fraud and conspiracy to obstruct justice and defraud the SEC.

The hedge fund manager, who is also a majority owner of Michael Kenwood Group LLC, is charged with running his Ponzi scheme from 2006 until February 2011 by using money raised from new investors to repay old investors. He was also accused of providing a fake income statement that was certified by a Venezuelan accountant, that his company had $275m in assets. The assets did not exist, investigators said.

The SEC told a U.S. court that they had already received the money from Illarramendi’s offshore funds. The assets were recovered last week and will be deposited in a U.S. bank while the civil case against the accused is finalized by the court.

Last month, the 40-year-old Venezuelan accountant Juan Carlos Horna Napolitano of Pembroke Pines, Florida, who provided the spurious income statement, admitted to SEC investigators that he had obstructed the watchdog’s investigation of Illarrramendi. Napolitano pleaded guilty to one count of conspiracy to obstruct an official proceeding of the SEC before United States District Judge Stefan R Underhill in Bridgeport.

In January this year, a U.S. federal judge ordered the freezing of Illarramendi’s assets in connection with the Ponzi scheme investigation.
Komfie Manalo

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