The U.S. District Court for the Southern District of New York says that Mark Evan Bloom and his North Hills Management, LLC (NHM) must together pay a $26 million civil penalty for running North Hills LP, a fraudulent commodity pool, and misappropriating customer monies.
It was in June 2010 that the court submitted a Consent Order of permanent injunction against the two defendants. The court said that both Bloom and his firm misappropriated around $13 million from North Hills, which they ran for at least seven years. During that period, Bloom kept up a fancy lifestyle, even buying a more than $5 million apartment in Manhattan.
Bloom and NHM were accused of hiding their misappropriation, making misrepresentations and material omissions to pool participants, and issuing false statements about North Hills. A permanent injunction, as well as permanent trading, registration, and solicitation bans were imposed.
Less than a year before the order was issued, Bloom was charged in a parallel criminal case on allegations not unlike those filed by the U.S. Commodity Futures Trading Commission. The regulator charged Bloom and North Hills Management with misappropriation from North Hills LP, as well as bilking participants in relation to distributions issued in the fund’s name in a 2005 anti-fraud action brought against the Philadelphia Alternative Asset Management Company (PAAM) and Paul Eustace.
Bloom purportedly failed to notify said participants that he was paid $1.6 million in referral fees for recommending that prospective investors consider PAAM. He’d also invested about $17 million of the North Hills Fund’s assets in a risky commodity futures and options fund run by PAAM.
Meantime, in the criminal case, Bloom, who pleaded guilty to the criminal charges, is waiting to hear his sentence. He will also have to pay investors restitution under the terms of that case.
In another and unrelated commodity pool fraud case, the U.S. District Court for the Western District of Michigan has put out an emergency order that freezes and preserves the remaining assets controlled by Jerry Stauffer.
The CFTC is accusing Stauffer of fraudulently soliciting at least $868K from investor to trade foreign exchange in a commodity pool. He purportedly guaranteed a monthly return according to profits to be earned from forex trading. Instead, false account statements boasting huge profits were generated while Stauffer took a chunk of the money for his own spending. He also allegedly ran the commodity pool illegally.
Hedge Fund Trader Paul Eustace and Philadelphia Alternative Asset Management Co. Ordered to Pay More Than $279 Million to Defrauded Customers and More than $20 Million in Civil Monetary Penalties in CFTC Action, CFTC, August 19, 2008
More Blog Posts:
Money Manager Paul Greenwood Gets 10 Years in Prison for $1.3B Investment Fraud, Institutional Investor Securities Blog, December 4, 2014
CFTC, FINRA, and SEC Fight Investor Fraud Together, Stockbroker Fraud Blog, December 5, 2014
CFTC Notifies Justice Department of Criminal Rate Rigging, Looks at Possible Swaps Loophole, Institutional Investor Fraud, September 9, 2014