Three hedge fund companies pleaded guilty to criminal conspiracy charges in a Florida Federal Court in a scheme that cost victims nearly $195 million. The defendants included KL Group LLC, Shoreland Trading LLC, and KL Triangulum Management LLC, U.S. Attorney R. Alexander Acosta said in a written statement.
These companies each admitted their role in running a hedge fund “scam” based out of West Palm Beach and Irvine, California, Acosta’s statement said. “The corporations admitted their complicity, through the attorney for their court-appointed receiver, in overseeing approximately $195 million in fraudulently obtained proceeds.” The companies will be sentenced in November.
Claims were also filed against three principles of the funds describing a scheme in which approximately 250 clients invested between 2000 and 2005. Although much of the money was apparently lost, a large amount of the funds allegedly went to the individuals’ personal use. Case documents say the defendants established opulent ocean-view offices in West Palm Beach with high-end furnishings and equipment. Prospective investors were given tours to view day trading purportedly using a proprietary system.
One of the three individuals has pleaded guilty to mail fraud and conspiracy and could be sentenced up to 25 years in prison. His brother faces trial in October on the related charges. The third defendant apparently remains a fugitive.
Shepherd Smith and Edwards represents investors nationwide in claims against members of the securities industry. If you, your firm or your pension fund has sustained losses as a result of fraud, negligence or other wrongdoing contact us to arrange a free consultation with one of our attorneys.