- 2007
Respondent raised $6,813,500 from at least 36 investors through the offer and sale of interests in two different hedge funds that he formed, Global Capital Fund, Ltd. and Summit Capital Trading, LLC. He used a private placement memorandum representing that hedge fund assets, less certain expenses, would be used to engage in securities trading, and that he would receive no compensation if there was a decrease in the hedge fund’s asset value. Respondent lost money making trades, but spent $1.4 million of fund assets for his personal use, and gave or loaned another $1.6 million to others. Respondent then mailed financial statements reflecting false rates of return, which he used to attract more investors. Finally, after losing or misappropriating almost all of the funds’ assets, respondent mailed investors a letter guaranteeing the return of their original investments, knowing that he did not have sufficient assets to repay these funds. In addition to these proceedings, respondent also was sentenced to 50 months in prison.
