| NEW YORK, July 24
NEW YORK, July 24 An investment adviser in his
70s was found guilty on Thursday on charges he defrauded clients
by funneling money to a New York horse racing firm and small,
thinly traded companies in exchange for secret kickbacks.
A federal jury in New York found James Tagliaferri, who
managed TAG Virgin Islands, Inc in St. Thomas, guilty on 12 of
14 counts including investment adviser fraud, securities fraud,
and wire fraud.
A mistrial was declared on two other counts after jurors
were unable to reach a verdict, a court clerk said, and U.S.
District Judge Ronnie Abrams set sentencing for Nov. 7.
Scott Tulman, Tagliafferi's lawyer, in an email said his
client "continues to maintain that at no time did he ever intend
to hurt his clients - some of whom were friends of his for
A spokesman for Manhattan U.S. Attorney Preet Bharara had no
Prosecutors said Tagliaferri, 75, invested more than $120
million of funds he oversaw at TAG Virgin Islands in private or
illiquid companies in exchange for at least $3.35 million in
When some clients began demanding their promised returns,
Tagliaferri used other clients' funds to repay them in a Ponzi
scheme-like fashion, and to make payments for companies he was
affiliated with, according to the government.
Among those companies was International Equine Acquisitions
Holdings Inc, a Garden City, New York-based company that owned
thoroughbred racehorses, including Big Brown, a stallion that
won the 2008 Kentucky Derby and Preakness Stakes before coming
up short in his attempt to complete the Triple Crown at the
Tagliaferri, a resident of Connecticut and the U.S. Virgin
Islands, also created false documents to conceal his fraud,
All told, the scheme, which ran from 2007 to 2010, aimed to
defraud more than 100 clients of TAG Virgin Islands, which
reported having about $252 million under management in 2009, the
Tagliaferri, who testified in his own defense, denied having
acted in bad faith.
Tulman, his lawyer, told jurors at the trial's outset it
made no sense to suppose a successful businessman would suddenly
become the "Darth Vader of investment advisers" at the end of
"He was negligent," Tulman said in his opening statement.
"He may even have been reckless. But he never intended to
deceive anybody, and that is what this case is all about."
The U.S. Securities and Exchange Commission has a parallel
civil lawsuit that is pending.
The case is U.S. v. Tagliaferri, U.S. District Court,
Southern District of New York, No. 12-cr-00115.
(Reporting by Joseph Ax; Editing by Mohammad Zargham)