Jeffrey A. Martinovich, the former CEO of MICG Investment Management LLC,
pleaded guilty to one count of money laundering on May 13, 2016. He entered
the plea agreement in U.S. District Court in Norfolk, Virginia, admitting
to the illegal cash transfer of a $100,000 payment to his trial attorney
in 2013. In return, 12 other pending felony fraud charges were dismissed.
Martinovich was convicted of fraud for inflating the value of an underlying
asset in order to solicit additional investments and pay himself more
in fees in 2013.
Acting on behalf of the hedge fund MICG Venture Strategies LLC., Martinovich
purchased two million shares of a privately traded solar energy company
in 2007. Because the shares were privately traded, an independent valuation
of the company’s worth was required, and during that valuation Martinovich
and others fraudulently inflated its value.
This inflated valuation allowed Martinovich to persuade new investors to
invest in MICG as well as calculate higher management fees to be paid
to himself. When the solar company filed for bankruptcy, the investors
suffered significant losses.
The Financial Industry Regulatory Authority (FINRA) expelled Martinovich
and his firm for securities fraud, improperly using client money, and
causing false statements to be sent to investors in 2011. Martinovich
was convicted in 2013 on 17 fraud charges, including conspiracy to commit
mail and wire fraud, 4 counts of wire fraud, 5 counts of mail fraud, and
7 counts of unlawful monetary transactions.
previously reported on Martinovich and MICG Investment Management.