How Main Line fraudster's pitch raised $12 million
"From 2004 to 2009 this fraudulent scheme was his only source of income"
Here's the pitch: "I am running what is commonly called a Hedge Fund under the SEC regulations. I manage about $300 Million dollars with 28 clients... I have about 17,000,000 of my own funds in the Hedge fund have been investing for my own account since 1974...
"I keep my strategy simple and invest in about 20 companies mostly in high tech area and big names like IBM-DELL-CISCO-APPLE. I may be long and short the companies several times a year... Last year my clients returns ranged from a 17% to 38% gain... I charge a 10% fee on profit after deducting any losses..."
Would you invest? US prosecutors in Philadelphia say S. Michael Alexander of Villanova "defrauded more than 15 friends and members of his family of more than $12 million" with these and similar claims.
Alexander pleaded guilty in federal court in Philadelphia yesterday to fraud and money laundering, and agreed to pay restitution of $7.5 million. He's been ordered to give up his mansion at 1200-08 Spring Mill Road (listed here at $4.4 million) and $400,000 in bank accounts the government has seized. He faces a maximum of 60 years in prison.
Alexander told would-be clients he ran a hedge fund, Hartford Investment Inc., and that "their money would be placed in an individual account and he would make trades on their behalf in exchnage for a 10% commission.... Instead, once victims sent money by check or wire to HII's Wachovia bank account, Alexander either transferred the money into his own Ameritrade acount or his personal Citizens Bank account.... From 2004 through 2009, this fraudulent scheme was (Alexander's) sole source of income."
See Alexander's plea agreement here, and the plea memo here.