Recent fraud charges against a New Jersey hedge fund are making the industry look bad. Prosecutors allege that investment firm Osiris Fund L.P. bilked over 75 investors out of millions of dollars.
According to the complaint, Peter Zuck and nine others formed Osiris, which seems appropriately named after the Egyptian god of death, in June 2009. They then hired unregistered agents to solicit investors to buy unregistered interests in the fund in violation of New Jersey’s securities laws. The fund’s offering documents also conveniently omitted to disclose that Zuck had previously served a five-year prison sentence for securities fraud and corporate misconduct.
Once the fund was up and running, Osiris began overstating its net asset value to extract higher fees from investors. The fund also allegedly hid massive trading losses from its clients by falsifying account statements,. To make things worse, Zuck and others also made illegal loans and transfers to related entities to fund office improvements and purchase a boat. At least they lived in style, but it’s over now.
“We allege that these defendants enriched themselves by pocketing at least $4 million of investors’ hard-earned money from the fund while they concealed substantial losses,” Attorney General Jeffery S. Chiesa said in a statement. “We’re asking the Court to freeze the defendants’ assets, with the goal of returning money to the defrauded investors.”
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