Hedge fund swindler ordered to pay $7.5 million
BOSTON (Reuters) - A man who stole money from clients after convincing them he was a Harvard-trained hedge fund manager was ordered to pay back more than $7.5 million, the U.S. Securities and Exchange Commission said on Thursday.
U.S. federal judge Richard Stearns ordered Andrey Hicks to return $2.5 million with interest to clients and to pay a civil fine of $2.5 million. Locust Offshore Management, Hicks' firm, was also ordered to pay a $2.5 million penalty, according to court records and the SEC.
Neither Hicks, who most recently lived in Massachusetts, nor his lawyer could immediately be reached for comment.
Hicks was arrested in Canada last year while trying to flee to Switzerland.
His fabrications won media attention partly because of his connection with National Basketball Association player Kris Humphries. Humphries, the former husband of reality TV star Kim Kardashian, had invested money with Hicks, according to a government source familiar with the matter.
The ruling by Judge Stearns ends one of the more brazen recent hedge fund frauds, at a time when many wealthy investors are still reeling from the shock of the Bernard Madoff and Allen Stanford investment swindles.
Texas financier Stanford was convicted earlier this month of running a $7 billion Ponzi scheme, and he will be sentenced on June 14. [ID:nL2E8E67JD] Madoff was arrested in 2008 and is serving a 150-year prison term for a Ponzi scheme considered to be the biggest financial fraud in U.S. history.
Hicks, a 28-year-old college dropout, portrayed himself as an exclusive hedge fund manager, boasting about two Harvard degrees and impressive experience on Wall Street. The marketing was convincing enough to help him raise at least $1.7 million from clients, the SEC said. He used some of his clients' money to pay for personal expenses.
Hicks told potential clients that his investing style relied on mathematical models he helped develop while obtaining a PhD. from Harvard. In reality, Hicks earned no degrees from the university and left after three semesters as an undergraduate, having earned a barely passing grade of D in the only mathematics course he took there, the SEC said.
In an offering memorandum, Hicks said Ernst & Young was the hedge fund's auditor while Credit Suisse served as its prime broker and custodian. The accountants did not audit the fund and Credit Suisse said it had no records of accounts held by Locust Offshore Fund.
Hicks also lied about his work experience, saying he had worked for Barclays Capital, where he "grew his book nearly two-fold and expanded his group's assets under management to roughly $16," the SEC said.
(Reporting By Svea Herbst-Bayliss; editing by Matthew Lewis)
- First Ebola case diagnosed in the United States: CDC |
- Advanced iOS virus targeting Hong Kong protestors -security firm
- Traveler from Liberia is first Ebola patient diagnosed in U.S. |
- Hong Kong democracy protesters and officials mark uneasy National Day |
- Mayor of Los Angeles suburb of Bell Gardens shot dead