$3.6 Million Recovery in Case Against Investment Adviser for Defrauding Investors In Failing Private Equity Fund

Defendants were charged for defrauding investors in the Midwest Opportunity Fund, which they misrepresented as a viable private equity fund that could offer high returns, while in reality the fund was in poor financial condition and investor money was being used to pay fund debts that respondent Hennessy had personally guaranteed. At least $641,408 was allegedly misappropriated to make such debt payments, propping up the fund and substantially reducing respondent Hennessy’s personal liability. New investor money was also misappropriated to cover a redemption. And twice letters of authorization were forged to transfer money from a client account to the fund in exchange for promissory notes that had not been repaid.