Hedge Fund Convictions Over The Weekend

HedgeCo News - Over the weekend there were hedge fund fraud related convictions in the US, Australia and Germany. All have been sentenced to jail time.

US: Five employees for hedge fund manager A&O Resource Management Ltd were sentenced for their part in a $100 million fraud scheme.

“Brent Oncale (the founder) and his co-conspirators operated a sham investment company that turned fraud and deceit into a business model,” said Assistant Attorney General Breuer. “They stole millions from hundreds of unsuspecting investors, pocketing huge sums for themselves.”

Russell E. Mackert, 52, general counsel for A&O, was sentenced to 188 months in prison; Brent Oncale, 36, former owner and founder of A&O, was sentenced to 120 months in prison; David White, 41, the former president of A&O, was sentenced to 60 months in prison; Eric M. Kurz, 47, a wholesaler of A&O investment products, was sentenced to 60 months in prison; and Tomme Bromseth, 69, an A&O sales agent in the Richmond area, was sentenced to 36 months in prison.

Australia: A New South Wales Supreme Court has convicted Shawn Richard of Astarra Asset Management with fraud, insisting on up to 5 years of jail time, the sentencing is scheduled for the 12 August.

The Australian Securities and Investments Commission alleged that the hedge fund manager was placing investor monies in overseas hedge funds, in circumstances where he would personally receive a significant portion of the money.

“The monies Richard placed in the overseas hedge funds had been raised by the responsible entity of ASF, Trio Capital Limited (Trio).” The ASIC said, “Richard received in excess of $6.4 million in undisclosed payments.”

EU: Helmut Kiener, the founder of 345-million euro ($497 million) hedge fund K1 Group, was sentenced to 10 years and eight months in prison. The ”Mini Madoff” was found guilty of fraud, forgery and tax evasion by a court in Germany.

Also sentenced last week: Danielle Chiesi was sentenced to 30 months in federal prison for securities fraud.

New names in the Petters Ponzi: Frank Elroy Vennes, Jr., a business associate of and primary fundraiser for Thomas J. Petters was named in a superseding indictment last week, the indictment also charges James Nathan Fry, age 57, of Orono, Minnesota, with five counts of securities fraud, four counts of wire fraud, and three counts of making a false statement to the United States Securities and Exchange Commission during its investigation of investments in PCI by hedge funds under the management of Fry’s company, Arrowhead Capital Management.