Connecticut Hedge Fund Manager Pleads Guilty in Massive Ponzi Scheme
hedge fund manager has pleaded guilty for his involvement in what has been described
as a massive
Ponzi scheme. Francisco Illarramendi, 42, of New Canaan, pleaded guilty to multiple
counts of fraud along with other charges.
Mr. Illarramendi appeared in U.S. District Court in Bridgeport on Monday, March 7, 2011. Mr. Illarramendi faces up to 70 years in prison. Federal authorities are seeking restitution to investors and the forfeiture of his assets.
According to federal prosecutors, Mr. Illarramendi operated the Ponzi scheme from 2006 to February, 2011, under Stamford-based Michael Kenwood Capital Management. Mr. Illarramendi has been accused of defrauding unsuspecting investors, creditors and the Securities and Exchange Commission (SEC).
Mr. Illarramendi, who waived his right to indictment by a grand jury, allegedly created fake documents to inflate bogus claims about the investors’ funds. He claimed that one hedge fund, the Short Term Liquidity Fund, had credits of approximately $275 million. However, prosecutors claim that the credits did not exist.
“While the precise dollar losses will not be known for some time, based on this fast-moving investigation, we believe this case represents the largest white-collar prosecution ever brought by this office,” said Connecticut U.S. Attorney David B. Fein in a statement.
Mr. Illarramendi pleaded guilty to two counts of wire fraud, one count of securities fraud, one count of investment advisor fraud and one count of conspiracy to obstruct justice. His sentencing date has yet to be set.