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Precy Dumlao, Opalesque Asia:
Sixty-two year-old hedge fund manager John C. Tausche was sentenced to 4 ½ years in prison in a federal penal colony after he was found guilty of participating in a $311m scheme to defraud his investors.
A report by Philly.com said that Tausche and his co-accused, German national Helmut Keiner, ran the Oceanus Funds from his offices in Wichita, Kansas, and connived to convince investors that Keiner’s K1 hedge funds were making more money than they actually were.
Court records showed that Keiner funneled millions of dollars from K1 into Oceanus, which then returned the money to K1 to give the impression that the K1 hedge funds were expanding in asset size.
Barclays and Bear Stearns invested into the K1 funds; $82m and $137m respectively. Both banks lost all the money.
In its findings, the court determined that Tausche earned $114m from the scheme and ordered him to pay Barclays $115m in restitution.
Kiener has already been tried, convicted and jailed in Germany as a result of the scam, the paper says.
The Federal Bureau of Investigation in Philadelphia originally charged the two business associates with defrauding institutional investors and causing collective losses of more than $311m, on February 7th, 2013. According to the FBI’s ...................... To view our full article Click here
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