This week, it was announced that the owner and manager of a New Jersey hedge fund had been sentenced to 72 months in prison for defrauding two investors out of more than $4 million. 62-year-old Nicholas Lattanzio of Montclair, New Jersey was convicted on all counts of an indictment, which charged him with two counts of wire fraud and two counts of securities fraud. The verdict was delivered following a three-week trial.
Documents filed in the case and courtroom evidence showed that from June 2013 through November 2014, the defendant orchestrated a scheme in which he and his hedge fund, Black Diamond Capital Appreciation Fund LP and several other related entities collected millions of dollars in upfront fees from two unsuspecting corporate investors. In return, they received the promise of future loans or investment opportunities that never materialized.
Instead of investing the money as promised, the defendant stole most of it and used it to pay himself a salary of more than $500,000. Some of the money was used to make personal purchases, such as buying a $1 million home, a new Range Rover and a $10,000 diamond ring. The defendant lied to the victims about the status of their funds to conceal the scheme and to convince them that their investments were safe.
Lattanzio has also been ordered to pay $3.93 million in restitution. Further details have been made available here.