The U.S. Securities and Exchange Commission announced monday it has charged Highview Point Partners LLC, a Stamford-based investment adviser, with engaging in a multi-year Ponzi scheme involving hundreds of millions of dollars.
The charges come just days after Highpoint filed for Chapter 11 bankruptcy protection.
Here are excerpts from the SEC’s press release on the situation.
Highview was added as a defendant to a case the SEC previously filed in January 2011, and three hedge funds managed by Highview were named as relief defendants because, according to the SEC’s charges, they are in possession of funds tainted by the Ponzi scheme. After a hearing, the Honorable Janet Bond Arterton, U.S. District Judge for the District of Connecticut, entered a consented-to order on May 13 temporarily freezing the assets of Highview and the three hedge funds it advises. A hearing on the SEC’s motion for a preliminary injunction is set for May 23.
Highview appears to be entagled in the case involving Francisco Illarramendi and MK Capital Management, another alleged ponzi scheme that might have cost investors $53 million. Illarramendi and MK Capital’s funds were already frozen by a court order.
On May 10, the SEC filed a second amended complaint adding Highview as a defendant, and charging that Illarramendi conducted his alleged fraud while he was a partial owner of Highview, a Commission-registered investment adviser, and that he used the two advisory firms (Highview and MK Capital Management) in tandem to conduct the scheme. In particular, the second amended complaint alleges, among other things, that Highview Point Partners, acting through Illarramendi, misappropriated money from the three hedge funds it advised: Highview Point Master Fund, Ltd., Highview Point Offshore, Ltd., and Highview Point LP. The second amended complaint alleges that Illarramendi hid the misappropriation in the Highview hedge funds by misappropriating money from different hedge funds managed by MK Capital Management. According to the second amended complaint, this acted as a fraud on both sets of clients, in that Illarramendi used money from one set of investors to repay earlier investors.