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Saturday, January 31, 2015

HEDGE FUND MANAGER RECEIVES 13 YEAR PRISON TERM FOR FRAUD

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23185 / January 30, 2015
Securities and Exchange Commission v. Francisco Illarramendi, et al., Civil Action No. 3:11cv-78
United States v. Illarramendi, 3:11-cr-0041-SRU
Court Sentences Connecticut-Based Hedge Fund Manager to Thirteen Years in Prison

The Securities and Exchange Commission announced that on January 29, 2015, a federal court in Connecticut sentenced former Connecticut-based hedge fund manager Francisco Illarramendi to thirteen years in prison, followed by three years of supervised release. Illarramendi was also ordered to pay restitution to the victims of his fraud, in an amount to be determined at a future restitution hearing. This sentence was imposed on Illarramendi's guilty plea 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, to obstruct an official proceeding and to defraud the SEC.

The SEC's action against Illarramendi and others remains pending. In January 2011, the SEC charged Illarramendi and various entities owned or controlled by him, including investment advisers Highview Point Partners, LLC, and Michael Kenwood Capital Management, LLC, with engaging in a multi-year Ponzi scheme involving hundreds of millions of dollars. On February 3, 2011, the U.S. District Court for the District of Connecticut appointed a receiver in the case to marshal the assets of a number of entities formerly owned or controlled by defendants Illarramendi, Highview Point Partners, and Michael Kenwood Capital Management. The receiver has collected and distributed over $264 million to parties harmed by the defendants' alleged wrongdoing. The receiver plans to make additional distributions to harmed parties at a later time as additional funds become available.

Also, on August 3, 2011, the Commission issued an Order by consent barring Illarramendi from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.

The SEC acknowledges and appreciates the work of the U.S. Attorney's Office for the District of Connecticut and the Federal Bureau of Investigation.

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