SEC charges NY hedge fund founders with fraud
* SEC: Client money looted for rent, travel, shopping
* Defense lawyer not immediately available for comment
NEW YORK, March 15 (Reuters) - The founders of a New York hedge fund firm were sued Tuesday by the U.S. Securities and Exchange Commission, which accused them of looting $1.8 million from a fund they run and inflating assets more than tenfold.
Eugenio Verzili, 44, and Arturo Rodriguez, 47, were charged with misusing client money at their firm Juno Mother Earth Asset Management LLC to pay for apartment rent, travel, meals, entertainment and department store purchases.
The pair inflated assets under management, once claiming that Juno oversaw $200 million though the total never exceeded $17 million, according to a civil lawsuit filed in Manhattan federal court.
In addition, the SEC alleged that Verzili and Rodriguez issued promissory notes to conceal their misappropriation, and filed false reports, and that Verzili falsely told investors that Juno partners invested up to $3 million in a client fund.
Verzili is Juno's chief executive, and Rodriguez its chief investment officer, according to the SEC complaint.
"Verzili, Rodriguez and their firm violated the most fundamental duties of an investment adviser by lying to their clients and misappropriating the money entrusted to their care," George Canellos, director of the SEC regional office in New York, said in a statement.
A lawyer for the defendants did not immediately return a call seeking comment.
The lawsuit seeks to recover ill-gotten gains, impose civil fines, and other remedies. Verzili now lives in Miami Beach, Florida, and Rodriguez in Costa Rica, the SEC said.
The case is SEC v. Juno Mother Earth Asset Management LLC et al, U.S. District Court, Southern District of New York. (Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)
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