by Brian Mahany
The SEC charged a Massachusetts based offshore hedge fund, Locust Offshore Management LLC and its operator Andrey Hicks with misleading investors. Criminal charges have not yet been filed.
According to the complaint, Hicks told prospective investors that he had two degrees from Harvard. He also claimed to have previously worked at Barclay’s where he had $16 billion under management. Finally, he claimed that Ernst & Young served as his fund’s auditor. All false says the government.
Although the case was just filed, the evidence presented by the SEC was enough to convince a federal judge to freeze the firm’s funds. That action insures investors may receive some money once the investigation and prosecution are completed.
The government believes that Hick’s false claims helped convince investors to give him millions of dollars – dollars that were to be placed in his purported offshore hedge fund. Instead, some of that money went straight to Hick’s pocket according to prosecutors.
Sometimes we see scams in which the product is simply to good to be true. In this case, the fund’s promoter was simply lining his pockets and using false credentials to help lure investors.
Before investing any money in an offshore hedge fund or thinly traded investment, always conduct some due diligence. Simply asking for a copy of the fund’s audited financials, for instance might have prevented investors from investing in a scam.
Prior to writing this blog, I looked at Hicks’ biography – not only did he graduate from Harvard with a bachelors and doctorate, he apparently graduated with a 4.0 grade point average. He also simultaneously runs 4 other businesses. Not bad for someone who graduated college just 4 years ago.
Is he a brilliant financial genius or a fraudster with a huge ego? The feds say the latter – they say Hicks is a college drop out.
ED NOTE: See our update on September 8th, 2013. Hicks is headed to jail for 40 months and the SEC announced that 3 whistleblowers would receive an award for coming forward with information about this scam!. You can read it here.
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