Hedge Fund Ponzi Scheme-Capital Mangagement Group Holdings
The SEC announced that, yet another "hedge fund", Capital Management Group Holdings has been charged with misappropriating funds and misleading investors. The scheme had all the hallmarks of a typical hedge fund ponzi scam: there was false documentation about risk and reward, there were massive trading losses to the fund, kickbacks from trading commissions for those losses which went to the managers and not the fund, and regulatory defaults were not disclosed.
Over a space of 5 years, it is alleged that Capital Management Group Holdings defrauded some 38 investors of $14 million, or approximately $350,000 per investor.
How does someone with $350,000 to invest not spend enough money to perform the necessary due diligence to avoid this scam? How can you have $350,000 in real hard coin of the realm to invest in a flimsy, talking about dollars scam? Could a simple due diligence model have protected the investors here?
Technorati Tags: due diligence, misleading investors, hedge fund, management group, invest, trading commissions, false documentation, ponzi, kickbacks, hallmarks
As I discussed before about hedge fund due diligence the checklist involves questions I don't even understand, and I suspect few ordinary investors do either. But, if you don't understand the due diligence checklist, then you have no business investing in the product.
Technorati Tags: due diligence, misleading investors, hedge fund, management group, invest, trading commissions, false documentation, ponzi, kickbacks, hallmarks
