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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
Financial Con Man, Posing as Hedge Fund Manager, Committed $5Mn Fraud
by Howard Haykin
Earlier this year, the SEC charged Nicholas Joseph Genovese, who purportedly ran a hedge fund, Willow Creek Fund, with stealing more than $5.3 million from at least 6 investors. The U.S. Attorney’s Office filed parallel criminal charges. Genovese is alleged to have directed the misappropriated funds into his personal brokerage account, where he sustained over $8 million in trading losses between 2015 and 2017. He also spent $263,000 on personal expenditures.
HOW GENOVESE ‘HOODWINKED’ INVESTORS. Genovese, 52, was the sole principal, owner and managing director of the general partner for the hedge fund, Willow Creek Fund. He no doubt dazzled investors with his residences in both New York City and Greenwich, CT, his supposed family connections, and his apparent investing acumen. Among the lies and falsehoods in the private placement memorandum for the Willow Creek Fund were statements that Genovese …
- had been a partner at Goldman Sachs;
- had been a Bear Stearns portfolio manager;
- has an MBA from Dartmouth - Tuck Business School;
- has a BS from the University of Kentucky;
- employed Grant Thornton CPAs as the auditor of Willow Creek Fund;
- managed $4 billion of the assets of the Genovese Drug Store family fortune;
- had $30-39 billion of assets under management at Willow Creek, the investment advisor and fund general partner, when it likely had less than $10 million in AUM;
- employed between 42 and 60 employees at Willow Creek, when in reality it had fewer than 10 employees; and
- had achieved investment gains of 30-40% per year at Willow Creek Fund.
WILL THE REAL NICHOLAS GENOVESE STAND UP? Contrary to what he said about himself, and whatever impression he made on investors, Genovese …
- between 1990 and 2004, in 5 separate criminal actions, he was convicted of theft by deception, grand larceny (3 times), identity theft and 2nd degree scheme to defraud in Illinois and New York.
- in 1998 and 1999, while serving a prison sentence, Genovese filed for and received Chapter 7 bankruptcy protection.
- although he’s listed on FINRA’s CRD database for financial representatives associated with broker-dealers, Genovese holds no securities licenses and was never associated with any registered B/D or investment adviser.
FINANCIALISH TAKE AWAYS. No matter what sort of safeguards and databases the regulators put in place for the investing public, people will forever fall prey to financial con men like Genovese – blinded by their ‘manufactured lifestyles of the rich and famous’, and erroneously believing that investment skills were behind these success stories.
If only they too can grab a piece of the action. SHADES OF BERNIE MADOFF.
If only they knew! BUT HOW CAN WE TELL THEM.
If regulators had a failsafe way of telling them. BUT WOULD THEY LISTEN?