Private Equity Fund Fraud - Russell L. Forkey

Neal V. Goyal – Boca Raton, Florida Investment Fund Manager Fraud and Mismanagement FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Thu, 29 May 2014 22:35:24 GMT

South Florida, including Boca Raton, Deerfield Beach, Coral Springs, Delray Beach and Boynton Beach Investment Fund Manager Fraud and Ponzi Scheme FINRA Arbitration and Litigation Attorney:

Securities and Exchange Commission v. Neal V. Goyal, et al., Civil Action No. 1:14-cv-03900 (N.D. Illinois)

SEC Charges Chicago-Based Investment Fund Manager with Stealing Investor Money and Conducting Ponzi Scheme

On May 28, 2014, the Securities and Exchange Commission obtained a court order freezing assets and halting a fraudulent scheme by Chicago, Illinois-based investment adviser Neal V. Goyal. In its complaint, the SEC alleges that Goyal told investors that the private funds he managed would invest in securities following a “long-short” trading strategy. However, Goyal actually did little trading and simply operated a Ponzi scheme that used new investor funds to pay redemptions to existing investors and fund his own lavish lifestyle. Goyal concealed the poor results of the few investments he did make by sending investors phony account statements that grossly overstated the performance of the funds.

In a parallel action, on May 28, 2014, the U.S. Attorney’s Office for the Northern District of Illinois filed a criminal information against Goyal.

According to the SEC’s complaint filed in federal court in Chicago, Goyal raised more than $11.4 million since 2006 for investments in four private funds that he managed and controlled. The complaint further alleges that Goyal’s investment strategy lost money from the outset, but he hid those losses from investors through the Ponzi payments and phony account statements. Meanwhile, Goyal misused investor funds to make down-payments and pay the mortgages on two homes he purchased. According to the SEC’s complaint, Goyal also siphoned away investor money to invest in a Chicago tavern, fund two children’s clothing boutiques that his wife operates in Chicago, and purchase artwork and lavish furniture.

The SEC’s complaint alleges that Goyal along with Caldera Advisors and Blue Horizon Asset Management violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8(a). In its complaint, the SEC seeks financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and a permanent injunction against Goyal, Blue Horizon Asset Management, and Caldera Advisors. The SEC named another Goyal-controlled entity Caldera Investment Group as a relief defendant in its complaint for the purpose of recovering any investor funds it received.

At the SEC’s request, the Honorable Rebecca R. Pallmeyer issued a permanent injunction and asset freeze against Goyal and his firms, who consented to the order without admitting or denying the allegations in the SEC’s complaint. Under the court’s order, monetary remedies will be decided at a later date.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Gaeton S. Della Penna – South Florida Private Placement and Private Investment Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Wed, 21 May 2014 15:10:47 GMT

Boca Raton, Boynton Beach, Delray Beach, West Palm Beach, Lantana, Florida Private Placment and Private Investment Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney:

Securities and Exchange Commission v. Gaeton S. Della Penna et al., Civil Action No. 8:14-CV-1203T30MAP

The Securities and Exchange Commission recently filed charges against Gaeton “Guy” S. Della Penna of Sarasota, Florida for engaging in a scheme to defraud investors who purchased securities in his private investment funds.

According to the complaint the SEC filed in the U.S. District Court for the Middle District of Florida, from 2008 until 2013, Della Penna defrauded investors in three private investment funds he operated. Della Penna raised approximately $3.8 million from investors, who were told their funds would be used to trade securities or invest in small companies. The SEC’s complaint alleges Della Penna lost nearly all of the investors’ money through a combination of unsuccessful investments, operating a Ponzi scheme, and diverting a large sum to himself. Della Penna misappropriated investor funds totaling about $1.1 million to pay personal expenses, including mortgage payments on his 10,000 square foot home and payments to his girlfriend. To cover up his fraud, Della Penna operated a Ponzi-like scheme by using later investors’ money to pay fake “returns” to prior investors. He also provided false account statements and other documents to some investors. Gaeton Capital Advisors, LLC, an entity to which Della Penna transferred some of the investor funds, is named as a relief defendant.

The SEC’s complaint alleges Della Penna violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8(a) thereunder. The SEC is seeking financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and a permanent injunction against Della Penna. The SEC seeks disgorgement of ill-gotten gains from relief defendant Gaeton Capital Advisors, LLC.

Also, the U.S. Attorney’s Office for the Middle District of Florida today announced related criminal charges against Della Penna.

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Berton M. Hochfeld and Hochfeld Capital Management, LLC. – South Florida Hedge Fund Mismanagement, Fraud and Breach of Fiduciary Duty Litigation and Arbitration Attorney

Russell L. Forkey — Fri, 31 Jan 2014 11:53:17 GMT

South Florida Hedge Fund Mismanagement, Fraud and Breach of Fiduciary Duty Federal and State Court Litigation Attorney:

Securities and Exchange Commission v. Berton M. Hochfeld, et al., Civil Action No. 12-CV-8202 (S.D.N.Y.)

Final Judgments Entered Against Former Hedge Fund Manager and His Company

The Securities and Exchange Commission recently announced that on January 22, 2014, the Honorable Paul G. Gardephe of the United States District Court for the Southern District of New York, entered final judgments against Berton M. Hochfeld (“Hochfeld”) and his wholly-owned entity Hochfeld Capital Management, L.L.C. (“HCM”), in SEC v. Hochfeld et al., 12-CV-8202. The SEC filed an emergency action in November 2012, charging Hochfeld and HCM with securities fraud for misappropriating assets and making material misstatements to investors in the Heppelwhite Fund L.P., a now defunct hedge fund. The Court previously entered judgments against Hochfeld and HCM that ordered, among other relief, injunctions and an asset freeze, and granted the Commission’s motion to create a Fair Fund to compensate defrauded investors. In October 2013, the Fair Fund made initial distributions, totaling more than $6 million, to 35 former Heppelwhite investors, which represented approximately 70% of each investor’s prior capital balance in the hedge fund. Pursuant to a Distribution Plan, the Fair Fund will make a second round of distributions to investors from additional funds collected, including proceeds from the sale of Hochfeld’s personal assets.

Hochfeld and HCM consented to entry of the final judgments, which enjoin them from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 203 and 206 of the Investment Advisers Act of 1940, and order disgorgement of $1,785,332, which will be deemed satisfied by the criminal forfeiture order entered against Hochfeld in a parallel criminal case filed by the U.S. Attorney’s Office for the Southern District of New York. In the criminal case, United States v. Hochfeld, 13-CR-021, Hochfeld pled guilty to securities fraud and wire fraud. The Court sentenced Hochfeld to a two-year prison term, which he is now serving, and ordered him to pay forfeiture and restitution totaling approximately $2.9 million.

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Equity Fund and Equity Manager Fruad and Mismanagement – South Florida Litigation and Arbitration Attorney

Russell L. Forkey — Fri, 31 Jan 2014 11:40:44 GMT

Private Equity Fund and Private Equity Fund Management Mismanagement and Fruad – South Florida Federal and State Court Litigation and Arbitration Attorney:

SEC Charges Manhattan-Based Private Equity Manager With Stealing $9 Million in Investor Funds:

The Securities and Exchange Commission recently charged a Manhattan-based private equity manager and his firm with stealing $9 million from investors in their private equity fund.

The SEC has obtained an emergency court order to freeze the assets of Lawrence E. Penn III and his firm Camelot Acquisitions Secondary Opportunities Management as well as another individual and three entities involved in the theft of investor funds.

The SEC alleges that Penn and his longtime acquaintance Altura S. Ewers concocted a sham due diligence arrangement where Penn used fund assets to pay fake fees to a front company controlled by Ewers. Instead of conducting any due diligence in connection with potential investments by Penn’s fund, Ewers’ company Ssecurion promptly kicked the money back to companies and accounts controlled by Penn so he could secretly spend investor funds for other purposes. For example, Penn paid hefty commissions to third parties to secure investments from pension funds. Penn also rented luxury office space and used the funds to project the false image that Camelot was a thriving international private equity operation.

According to the SEC’s complaint filed in federal court in Manhattan, Penn tapped into a network of public pension funds, high net worth individuals, and overseas investors to raise assets for his private equity fund Camelot Acquisitions Secondary Opportunities LP, which he started in early 2010. Penn eventually secured capital commitments of approximately $120 million. The fund is currently invested in growth-stage private companies that are seeking to go public.

The SEC alleges that Penn has diverted approximately $9.3 million in investor assets to Ssecurion. With the assistance of Ewers, who lives in San Francisco, Penn repeatedly misled the fund’s auditors about the nature and purpose of the due diligence fees. However, the scam began to unravel in 2013 when Camelot’s auditors became increasingly skeptical about the fees. In their haste to cover their tracks, Penn and Ewers brazenly lied to the auditors and forged documents as recently as July 2013, pretending the files were generated by Ssecurion.

The SEC’s complaint charges Penn, two Camelot entities, Ewers, and Ssecurion with violating the antifraud, books and records, and registration application provisions of the federal securities laws. The complaint seeks final judgments that would require them to disgorge ill-gotten gains with interest, pay financial penalties, and be barred from future violations of the antifraud provisions of the securities laws. The SEC’s complaint also charges another company owned by Ewers – A Bighouse Photography and Film Studio LLC – as a relief defendant for the purposes of recovering investor funds it allegedly obtained in the scheme.

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