Amerindo's Vilar Charged With Stealing

Discussion in 'Wall St. News' started by range, May 27, 2005.

  1. range


    Wild story from Bloomberg:

    Amerindo's Vilar Charged With Stealing From Client (Update4)

    May 27 (Bloomberg) -- Alberto Vilar, president and founder of New York-based Amerindo Investment Advisors Inc., has been arrested and charged with stealing $5 million from a client.

    Federal prosecutors in New York said in a complaint unsealed today that Vilar, ranked by Forbes Magazine last year as the 327th-richest American, used an investor's money to make contributions to Washington & Jefferson College, his alma mater, and to pay for a catering service and dishwasher repair.

    The unnamed investor's $5 million was used by Vilar in 2002 ``as a personal piggy bank to pay personal expenses and make charitable contributions, without the knowledge, consent, or authorization of the victim,'' U.S. Postal Inspector Cynthia Fraterrigo said in the complaint.

    Vilar, 64, has given gifts of more than $200 million to opera groups, medical institutions, and his college, the complaint said, citing news reports. His Amerindo Technology Fund has fallen 17 percent this year, after gaining 24 percent last year and 85 percent in 2003. From 2000 to 2002, the fund lost more than 90 percent of its value.

    In 2002, when the alleged fraud occurred, The New York Times reported that he was having difficulty meeting his financial commitments to arts groups. In March 2003, Vilar was behind on mortgage payments at three vacation homes in Colorado's Vail Valley and faced foreclosure, the Denver Post reported.

    `Tip of Iceberg'

    Vilar had a reported net worth of about $950 million in December 2004; Amerindo had about $1.2 billion in assets under management as of July 15, 2004, according to the complaint.

    ``The charges are very serious and very well-founded,'' Assistant U.S. Attorney David Esseks said in court today. ``We fear that they are just the tip of the iceberg.''

    Vilar was arrested at 8:15 p.m. last night at Newark Liberty International Airport, after returning from a conference in Las Vegas, prosecutors said. He's being held without bail.

    He appeared in Manhattan federal court this afternoon and made no comment. His lawyer declined to comment after the hearing.

    Prosecutors say Vilar induced the unnamed client to place $5 million with Amerindo, stole the money, and later ``made numerous misrepresentations'' about the status of the investment.

    The complaint, citing the Washington & Jefferson Web site, says Vilar, a 1962 graduate, pledged $18.1 million toward the construction of the college's Vilar Center for Technology.


    Vilar is the biggest single patron of the Metropolitan Opera in New York, the John F. Kennedy Center for the Performing Arts in Washington, The Mariinsky (Kirov) Opera and Ballet in St. Petersburg, Russia, and the Royal Opera House in London, the Washington & Jefferson Web site says.

    Prosecutors say the victim invested millions of dollars with Vilar and Amerindo over the past 20 years.

    According to the complaint, Vilar in June 2002 urged the investor to place millions of dollars in an Amerindo venture that was supposed to receive matching funds for investing in small businesses, under a U.S. government program.

    Before receiving those funds, the U.S. Small Business Administration had to grant a license to the Amerindo venture, the complaint says. Amerindo never received the license.

    Instead of depositing the $5 million in the Amerindo venture, Vilar on June 20, 2002, deposited the money into a Panamanian company he controlled that held positions in technology stocks and, at the time, had a negative balance of $428,000, the complaint says.

    Born in Cuba

    Prosecutors say Vilar began transferring the money into personal accounts that he used to make charitable gifts and to pay expenses. In 2003 and 2004, he repeatedly told the client that the investment remained at full value during an ``unprecedented bear market.''

    Vilar was born in Cuba and came to the U.S. after Fidel Castro seized power in 1959. He began his investing career with a now-defunct emerging-growth firm, Burnham & Co., which later became part of Drexel Burnham Lambert Inc.

    Amerindo was originally founded to invest money for pension funds and private individuals. In 1996, Vilar opened the Amerindo Technology Fund.

    The case is U.S. v. Vilar, 05 Mag 937, U.S. District Court for the Southern District of New York.

    To contact the reporter on this story: David Glovin in U.S.
    District Court in New York at

    Last Updated: May 27, 2005 15:28 EDT
  2. The whole Amerindo is a freaking scam.. wow.. quite a shocker.
  3. jem


    I will bet that the panamanian company was very good at front running the fund.
  4. reg


    I remember requesting a brochure from Amerindo in early 2000 and found that their technology fund was heavily invested in a company called Etoys. I recall saying to myself, "Only a fool would invest in a company like that, and these guys call themsevles fund managers?". The fund lost almost 50% of its value a few months later.
  5. this guy used to be all over cnbc touted as one of the best fund managers back in the boom. he then proceded to get crushed in the bear.
  6. just wondering, but why does the 30Xth richest man have a mortgage against his homes? is it because he was financially in trouble or do the rich usually mortage their homes?
  7. it will interesting too see how this one develops, how many more funds like this will go the same way. they were deemed to be the best in internet investing.
  8. alotta rich guys would rather invest the money, then use the interest from the investments to pay the piti on a mortgage. if their realized gains exceeded the payments on the cheap 6% mortgage, they'd be ahead of the game. this guy made the mistake of putting the lion's share of his net worth into his fund that lost 90% during the crash.

    i found this excerpt from the nypost interesting..

    betcha he'd like a little of that money back, eh? sounds kinda like the M.C. Hammer story. he wanted to be a big shot by giving his crew millions of dollars. then a couple years later when he was broke, his boys were like.. see ya!
  9. this was major news at the time, now compared to madoff it seems small.
  10. Illum


    Cnbc is such trash.
    #10     May 31, 2009