Fraud investigations result in charges
Federal authorities brought charges in two major securities fraud investigations Wednesday, saying one scheme fell apart because of publicity about the Bernard Madoff scandal.
In that case, New Jersey fund manager James Nicholson, 42, was accused of defrauding investors of as much as $900 million since 2004. David Rosenfeld, associate director in the SEC’s office in New York, said the Nicholson case is among the largest investment frauds.
"This was truly an egregious fraud of immense proportions," Rosenfeld said.
Prosecutors said the fraud was discovered after several investors tried to redeem money from his Westgate Capital fund after hearing about the more than $50 billion fraud blamed on Madoff.
In the second case, Paul Greenwood, 61, and Stephen Walsh, 64, were charged with conspiracy, securities fraud and wire fraud payday loan in advance. The men ran Greenwich, Conn.-based WG Trading Co. and Westridge Capital Management Inc., based in Santa Barbara, Calif. They also had offices in Manhattan and Jersey City, N.J.
The probe began with an audit earlier this month by the National Futures Association, a Chicago-based regulatory agency for the U.S. futures industry. The group suspended the pair’s membership after they refused to answer questions about their books.
Prosecutors allege that since the summer of 2007, $1.3 million in illegal wire transfers were made to bank accounts held by Greenwood and Walsh’s wife.
Filed under: business by Wolf