May 11, 2018 / 7:56 PM / 4 months ago

Premium Point founder, members plead not guilty to fraud charges

NEW YORK, May 11 (Reuters) - The founder and two former members of New York investment firm Premium Point Investments LP on Friday pleaded not guilty to charges that they inflated the value of assets held by the firm’s hedge funds by more than $200 million.

Premium Point founder Anilesh Ahuja, 49, former partner Amin Majidi, 52, and former trader Jeremy Shor, 46, pleaded not guilty to charges of securities fraud, wire fraud and conspiracy before U.S. District Judge Katherine Polk Failla in Manhattan federal court.

Lawyers for the defendants declined to comment. All three were taken into custody on Wednesday and are now free on bail.

Premium Point, which specialized in mortgage-related investments through hedge and private equity funds, managed assets valued at more than $5 billion at its peak, according to prosecutors. It filed for bankruptcy in March.

Ahuja founded the firm in 2008 after a four-year stint as head of the mortgage-backed securities group at Deutsche Bank AG.

Authorities said that from about 2014 to 2016, Ahuja, Majidi and Shor worked together to mark up the value of assets held in Premium’s hedge funds in reports to investors and potential investors, in part by getting fraudulent quotes on securities from “corrupt brokers.”

When an unidentified person at the firm confronted Ahuja and Majidi about pressure to inflate asset values, Ahuja told the person to “put on your big boy pants,” the indictment said. The person eventually resigned, according to the indictment.

After its auditor questioned the valuations in 2015, Premium Point told investors it had over-valued all of its funds by 13 percent to 15 percent from September 2015 to March 2016, prosecutors said.

The mismarking was even more serious in Premium’s flagship mortgage credit hedge fund, which was mismarked by 24 percent, and dated back to at least January 2014, the prosecutors added. (Reporting By Brendan Pierson in New York; Editing by Dan Grebler)

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