APRIL 4, 2009
A Folsom, California based hedge fund manager named Anthony Vassallo is alleged to perpetrated a Ponzi scheme on approximately 150 investors.
Unfortunately, in the current environment of Ponzimonium news of another hedge fund fraud is nothing new.
After all, the 29-year old Vasallo (along with his 66 year old partner Kenneth Kenitzer) was only promising a modest 36% return with absolutely no risk. Certainly reasonable....
Last month, Mr. Vassallo was charged with $40 million in fraud, money laundering and securities law violations according to FINalternatives. Vassallo met the majority of the investors in his Folsom, California based Vassallo Equity Investment Management and Trading via his affiliation with the Mormon church. Vasallo allegedly put money into high-risk ventures and luxuries including $103,000 Lexus for his wife. The SEC has since frozen $1.2 million of Vasallo's assets. The original complaint can be seen here.
Vassallo's story has two interesting twists:
1) Mr. Vasallo's former bodyguard was also arrested and accused of trying to shake down investors for money -
Question: Why does a hedge fund manager need a bodyguard and who paid for it - the same investors he ripped off?
2) Three former Vasallo investors bailed him out -
The three former investors were:
a) Sheila Watford of El Dorado Hills, California: the mother-in-law of Vasallo's sister (Alicia Watford)
b) Dr. Roy Harris
c) Cynthia Harris
Ms. Watford, the Harris' and Mr. Vassallo's father (whose is also named Anthony) pledged the equity in their homes to assist with the younger Vasallo's release.
From a purely due diligence perspective, I will go out on a limb and say that if a hedge fund manager has a bodyguard - do not invest. I would also hazard an educated guess that pledging all this property is not a sound investment, that is of course Mr. Vassallo can offer the same risk-free guarantee he was for his hedge fund....
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