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Regulatory Sanctions

Financial Con Man, Posing as Hedge Fund Manager, Committed $5Mn Fraud

June 30, 2018

by Howard Haykin


Most financial frauds handled by the SEC involve individuals who are not registered with the Commission, an SRO (such as FINRA), or a state regulatory authority. In truth, these individuals are nothing more than poseurs masquerading as hedge fund managers, private investors, investment advisors, or traders, with promises and guarantees to generate enormous financial wealth for unsuspecting investors, their 'pigeons'.


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?