Hedge Fund Reader : Hedge Fund fraud costs millions to Floridians

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August 22, 2005

Hedge Fund fraud costs millions to Floridians

In a scenario, where the hedge fund industry operates without any accountability, transparency and many regulations, disasters are inevitable. Recently a full blown scam came to light when hoards of Floridians saw their money vanish without a trace. KL Financials collected $160 million from 200 unsuspecting investors have now been charged for misrepresenting the fund's performance and possibly misappropriating money. Most of these 200 investors were people of retirement age and have reportedly lost everything. The company’s assets have now been frozen. Three men have been accused of directly receiving $20 million during their six-year reign at KL and spending lavishly on million-dollar homes, exotic sports cars and frequent trips to Las Vegas. Two of these men have fled the country and the third who stayed back is being questioned on the ware bouts of the other two. But even he has not disclosed anything and has now asserted his Fifth Amendment right to avoid self-incrimination to each of 195 questions asked. KL Financials, self proclaimed hedge funds operators had flashy offices in Palm Beach country and were successful in impressing investors who poured in large amounts of their savings in the lure of huge profits. Businessweek.com reports:

“Most of KL Financial's 200 clients were men of retirement age. Gary Klein, a lawyer representing dozens of them, told The Miami Herald that he has clients who lost everything.”

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August 22, 2005 in Gossip & Scandal | Permalink