Purported Hedge Fund Manager Pleads Guilty To Fraud Conspiracy Charges

May 26 2017 | 6:25pm ET

Purported hedge fund manager Nicholas Mitsakos has pled guilty in Manhattan federal court to one count of conspiracy to commit securities and wire fraud, nearly a year after he was arrested in August 2016.

Mitsakos, who founded San Francisco-based Matrix Capital Markets in 2013, was accused of fraudulently soliciting investments in Matrix by distributing marketing materials claiming millions of dollars in AUM and outsized returns. 

One investor, reportedly a Cayman Islands-based fund, is said to have relied on such claims to make a $2 million investment into Matrix in September 2015 only to discover the firm had no actual assets under management and returns were based on a hypothetical stock portfolio that had been retroactively altered to enhance performance.

At the time of his arrest, the U.S. Securities and Exchange Commission announced separate civil fraud charges against Mitsakos, who was also interim chief executive of Irvine, CA-based digital media and virtual reality company Ubiquity until the charges were filed last year.

Although the maximum sentence for the charge is five years, prosecutors reportedly expect to ask for 2.5 to three years, according to a Reuters article citing a written plea agreement. As part of that agreement, Mitsakos will not appeal a sentence of 37 months or shorter and will forfeit more than $860,000, the article added. 

"As he admitted in pleading guilty…Nicholas Mitsakos purported to operate a successful hedge fund, but in reality, it was a sham from the outset," said Acting U.S. Attorney Joon Kim in a statement quoted by Reuters. 

The case is USA v. Mitsakos, U.S. District Court, Southern District of New York, No. 16-cr-00631.


In Depth

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Cash: An Asset In Adolescence

Aug 31 2017 | 3:34pm ET

If the investment industry has a rebellious teenager in the house today, that teenager...

 

From the current issue of