Entrust Capital Management Fraud
On September 28The investment adviser charged is Amit Mathur. The entire indictment can be read here.
The SEC charged Mathur and others last year, which revealed a number of interesting details about this hedge fund fraud.
First, how did Mathur convince investors about the pedigree of his firm?Apparently, he simply stole the materials copying Entrust Northeast's website.
Second, how did Mathur think he was going to close down his little hedge fund fraud. The hedge fund had large trading losses, legitimate losses. How did Mathur make money with losing trades? Simple, 90% of the commission owed to the brokerage doing the trades were kickbacked to Mathur.
Third, how did he keep his investors convinced of his skill? The oldest trick in the books, fake statements of return. Why bother taking the time to doctor a cheque, when you can easily doctor a statement as Charles Ponzi completely understood.
Fourth, some of the money Mathur stole from his investors wound up in real estate deals -which actually made money! But Mathur apparently would rather scam than be honest, the Yellow Kid would have understood this.
Fifth, the largest investor lost over $11 million was a well respected banker.
The moral: due diligence has to be continuous.
Technorati Tags: mathur, investment adviser, hedge fund, fraud, investors, federal grand jury, entrust, shrewsbury, indictment, amit, stole, pedigree, convince, legitimate, brokerage
