U.S. Attorney, SEC File Charges Against San Francisco Hedge Fund Manager Aug 12 2016 | 12:51am ET U.S. authorities have accused a San Francisco hedge fund manager with fraud for allegedly misrepresenting the amount of money the firm had under management and diverting investor capital for unauthorized personal and business expenses. Nicholas Mitsakos and his firm, Matrix Capital Markets, are alleged to have falsely marketed themselves as experienced money managers with a highly successful track record and assets under management in the millions, according to an SEC complaint. In fact, the SEC contends, the firm did not manage any actual client assets at all, and the returns cited were based on a hypothetical portfolio instead of real trading. Moreover, Mitsakos and Matrix Capital are alleged to have spent $800,000 from a $2 million investment in September 2015 on car payments, credit cards, rent and legal bills, according to the SEC complaint. In addition to the civil charges filed against Mitsakos and Matrix by the SEC, the U.S. Attorney’s Office for the Southern District of New York has reportedly also filed parallel securities fraud, wire fraud and conspiracy charges against Mitsakos. “We allege that Mitsakos and his firm tried to lure prospective investors with a mirage of assets under management and phony performance results, and when they finally won some actual business from a client, they proceeded to steal a large portion of it,” said Andrew Calamari, Director of the SEC’s New York Regional Office, in a statement. “Whenever pitched an investment opportunity with claims of lofty historical performance, it’s important for investors to take the time to verify the information and make sure they’re getting the truth before deciding to invest.” According to Mitsakos’ LinkedIn profile, Matrix Capital launched in 2015 as a “value-based public equity investment fund” which invests a long/short strategy. No additional details about the fund’s structure were immediately available. from FINALTERNATIVES
Berkeley shop Ponzi scheme hits a new merlot The owner of a bankrupt Berkeley wine shop pleaded guilty in federal court andadmitted to a Ponzi schemethat lasted over 20 years that bilked customers from at least $45 million. John Fox, who owned the Premier Cru, embezzled customers' money and used it for his home, cars, credit card bills, college tuition and on women he met online.(CBS 5 - San Francisco)
Well, this is just another case where the manager rips off the client when the manager has access to the clients' funds. Paragraphs 35, 36, and 47 of the SEC complaint are the most damaging, quoted below: "35. For example, in November 2015 and December 2015, Mitsakos’ circulated to potential investors Matrix Newsletters dated October 31, 2015 and November 30, 2015, which represented that Matrix Capital used Broker A and Broker B as its “Prime Brokers.” In reality, Matrix Capital did not have a Prime Brokerage relationship with either firm." "36.In June 2016, Mitsakos told a prospective investor that he used Broker A’s platform to place the Matrix Portfolio’s trades. In reality, the Matrix Portfolio never placed a single trade through Broker A’s trading platforms and—until September 2015—did not place any trades anywhere." "47. By January 2016, Mitsakos had spent approximately $600,000 of the Fund’s investment to pay legal bills, credit cards, rent for his home, his Mercedes payment, and other unauthorized personal and business expenses. These expenses far exceeded the management or performance fees to which Mitsakos was entitled." https://www.sec.gov/litigation/complaints/2016/comp-pr2016-161.pdf
18 North America US Federal prosecutors have charged San Francisco hedge fund manager Nicholas Mitsakos with fraud, alleging that he schemed to raise money for his fund by falsely representing past performance and overstating the value of assets under management. Preet Bharara, the US Attorney for the Southern District of New York, announced charges of securities and wire fraud against Mitsakos alleging that from at least May 2014 through August 2016, he fraudulently solicited investments in a hedge fund that he had founded, Matrix Capital, by distributing marketing materials claiming that Matrix had millions of dollars under management and had achieved outsized returns since 2012. Instead of investing all of the money though, Bharara alleges that Mitsakos, who is claimed to have secured almost USD2 million based on false representations, diverted approximately USD800,000 to cover personal expenses and lost more than two-thirds of the money he did invest. Bharara says: “Nicholas Mitsakos, founder of Matrix Capital, allegedly promised huge returns and told would-be investors that he had ‘a little more than USD60 million’ in his hedge fund. But as alleged, Mitsakos essentially ran an imaginary portfolio, which just tracked the performance of certain stocks without actually having a financial position in them. Instead, Mitsakos allegedly spent much of his investors’ money on car payments, credit cards, and rent.” Mitsakos has been charged with one count of conspiring to commit securities and wire fraud, one count of securities fraud, and one count of wire fraud. The conspiracy charge carries a maximum term of five years in prison. The securities and wire fraud charges each carry a maximum term of 20 years in prison. The charges also carry a maximum fine of USD5 million, or twice the gross gain or loss from the offence. In a separate action, the SEC has filed civil charges against Mitsakos. from Hedgeweek
Berkeley wine store owner who stole $45 million sentenced http://www.sfgate.com/crime/article/Berkeley-wine-store-owner-who-stole-45-million-10797297.php
>to pay legal bills Prepaid for the trial? I never understand why these guys don't have a planned end game. What exactly is their plan when they run out of money or get discovered?
https://www.winefraud.com/winefraud-news/premier-cru/ "Wine Futures" LOL https://en.wikipedia.org/wiki/En_primeur http://www.wine-searcher.com/futures.lml A New Model Predicts Wine Futures Prices With High Accuracy: Lessons from Bordeaux En Primeur for Small Boutique Wineries in the US by Becca • April 2, 2015 http://www.academicwino.com/2015/04/wine-futures-model-bordeux-en-primeur.html/