Taxi Driver Charged With Hedge Fund Fraud |
Date: Tuesday, May 5, 2009
Author: Paula Schaap ,Senior Reporter, Hedge Fund.net
A New York City taxi driver and an associate were arrested and charged with bilking investors out of $20 million for a fraudulent hedge fund operation.
Alan Fishman, 49, of Brooklyn, N.Y., and Daniel Ledven, 37, of Creskill, N.J., were arrested Thursday and charged with securities fraud, the New York U.S. Attorney said in a statement. Gary Gelman, 39, who is Fishman’s nephew, was also charged with the same scheme, but is still at large.
Each of them faces 20 years in prison and a $5 million fine, if they are convicted.
Arthur Gershfeld, an attorney for Fishman, told HedgeFund.net because of the ongoing nature of the case, he could not make a statement at this time. An attorney for Ledven did not immediately return a telephone call seeking comment.
Fishman set up A.R. Capital Group in 2002 with his nephew. Although fund sales brochures said that the fund invested in “currency trading, distressed securities, short selling, real estate investments, market neutral, special situations, debt obligations, multi strategy and funds of funds,” the only investment was in three Ukrainian companies and a Ukrainian money market fund.
Fishman also told investors that managed a “successful transportation business” before setting up his hedge fund and had a college degree in finance. Although it was true that he was a cab driver, the college degree in finance was a fiction, prosecutors charged.
At least from the two investors that the FBI spoke to get information for the criminal case, it appears as though A.R. Capital targeted retirees from around the country. One investor was a retired 65-year-old from Ohio, while the other was 73 and lived in South Dakota, according to court documents.
The Securities and Exchange Commission investigated A.R. Capital in 2006 and issued a subpoena for records on Sept. 7, 2006. The fund abruptly shut down, investors lost all their money and the owner disappeared, the government said.
What happened between the SEC investigation and the criminal charges is unclear. An SEC spokesman wouldn’t confirm or deny the earlier investigation, in keeping with the agency’s policies.
Sec Chairman Mary Schapiro has said that her office is actively investigating 150 hedge funds. Last week, the SEC brought two fraud cases against hedge funds: one against Ruderman Capital Management in Beverly Hills, Calif., the other against Stamford, Conn.-based Ponta Negra Group. On Friday, the FBI arrested Ponta Negra Group’s founder, Francesco Rusciano, 27, and charged him with criminal fraud.
Alan Fishman, 49, of Brooklyn, N.Y., and Daniel Ledven, 37, of Creskill, N.J., were arrested Thursday and charged with securities fraud, the New York U.S. Attorney said in a statement. Gary Gelman, 39, who is Fishman’s nephew, was also charged with the same scheme, but is still at large.
Each of them faces 20 years in prison and a $5 million fine, if they are convicted.
Arthur Gershfeld, an attorney for Fishman, told HedgeFund.net because of the ongoing nature of the case, he could not make a statement at this time. An attorney for Ledven did not immediately return a telephone call seeking comment.
Fishman set up A.R. Capital Group in 2002 with his nephew. Although fund sales brochures said that the fund invested in “currency trading, distressed securities, short selling, real estate investments, market neutral, special situations, debt obligations, multi strategy and funds of funds,” the only investment was in three Ukrainian companies and a Ukrainian money market fund.
Fishman also told investors that managed a “successful transportation business” before setting up his hedge fund and had a college degree in finance. Although it was true that he was a cab driver, the college degree in finance was a fiction, prosecutors charged.
At least from the two investors that the FBI spoke to get information for the criminal case, it appears as though A.R. Capital targeted retirees from around the country. One investor was a retired 65-year-old from Ohio, while the other was 73 and lived in South Dakota, according to court documents.
The Securities and Exchange Commission investigated A.R. Capital in 2006 and issued a subpoena for records on Sept. 7, 2006. The fund abruptly shut down, investors lost all their money and the owner disappeared, the government said.
What happened between the SEC investigation and the criminal charges is unclear. An SEC spokesman wouldn’t confirm or deny the earlier investigation, in keeping with the agency’s policies.
Sec Chairman Mary Schapiro has said that her office is actively investigating 150 hedge funds. Last week, the SEC brought two fraud cases against hedge funds: one against Ruderman Capital Management in Beverly Hills, Calif., the other against Stamford, Conn.-based Ponta Negra Group. On Friday, the FBI arrested Ponta Negra Group’s founder, Francesco Rusciano, 27, and charged him with criminal fraud.