April 23, 2009 / 9:07 PM / 9 years ago

Jailed NY fund manager Nicholson indicted for fraud

NEW YORK (Reuters) - A jailed New York hedge fund manager, accused in February of overstating asset values by hundreds of millions of dollars while defrauding investors, has been indicted on several charges, U.S. prosecutors said on Thursday.

The government said James Nicholson, 42, was indicted by a grand jury on four charges including securities fraud and investment adviser fraud after running a scheme since 2004 involving investor losses of at least $150 million.

Nicholson, founder of Westgate Capital Management LLC of Pearl River, New York, was arrested and criminally charged on February 25, when the government said his purported scheme was partly exposed by requests for redemptions following the disclosure in December of charges against high-profile swindler Bernard Madoff.

Dozens of investors who asked Nicholson for redemptions had their checks returned for insufficient funds.

Madoff pleaded guilty on March 12 to running the biggest investment fraud in Wall Street’s history, which prosecutors have said involved as much as $65 billion. Madoff, 70, was sent to jail pending sentencing in June.

Nicholson is being held in jail because he has been unable to meet the conditions of bail approved by a judge.

“We think the government will have a very difficult time proving the allegations and we are prepared to plead not guilty and fight the charges,” said his lawyer, Erika McDaniel Edwards.

The original criminal complaint and the indictment against Nicholson said he falsely claimed to investors that he had assets under management of between $600 million and $900 million.

The government is seeking at least $150 million in forfeiture, according to court papers, other money and properties, an interest in a private jet, club memberships in Florida and a seat license for club seats at a new stadium for the New York Jets National Football League team.

Reporting by Grant McCool; Editing by Richard Chang

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