Another hedge fund imposter has been hit with criminal and civil fraud charges. Nicholas Lattanzio was charged with three counts of wire fraud and two counts of securities fraud for defrauding $4 million from investors in his hedge fund, the Black Diamond Capital Appreciation Fund, and other entities, according to the U.S. Attorney’s Office for the District of New Jersey. The Securities and Exchange Commission said Lattanzio defrauded small companies by posing as a hedge fund manager and falsely promising that he would arrange project financing for them “and generate substantial returns on money they invested” in his fund. Lattanzio, who claimed the fund had $800 million and had generated double-digit returns, told small companies they could withdraw their money if the financing didn’t materialize. In reality, the fund never had more than $5 million, said the SEC. “As alleged in our complaint, Lattanzio masqueraded as a sophisticated hedge fund manager to capitalize on small businesses’ legitimate need for financing,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.
Lattanzio is accused of using most of the money for personal reasons, including purchase of a $1 million home, a $124,000 luxury car and $100,000 worth of merchandise from Tiffany & Co. He also allegedly used the money to pay off more than $760,000 in credit card debt, withdrew $570,000 in cash or checks written to himself and his girlfriend, paid more than $30,000 to a yacht broker, and funded his children’s private-school tuition and his membership at an exclusive golf club, according to the SEC. The credit card expenditures included more than $24,000 for a family trip to Hawaii, more than $50,000 for tickets to New York Yankee games, and thousands of dollars in clothes, restaurants, jewelry and furniture, according to the government. The wire and securities fraud counts each carry a maximum penalty of 20 years in prison and a $250,000 fine. The government is also seeking the forfeiture of Lattanzio’s home, a 2013 BMW 650 and various pieces of jewelry.
Meredith Whitney has had it with running a hedge fund. The one-time high-profile bank analyst says she no longer wants to manage other people’s money after her ill-fated foray with her firm, Kenbelle Capital, and its American Revival Fund. “I think that chapter of my life is over,” she told Fox Business. “This whole experience has been highly unfortunate and I’m putting it behind me.” On Tuesday we reported that Whitney settled a lawsuit filed by Michael Platt’s BlueCrest Capital Management, which had sought the $46 million it had invested after the fund lost money. “At the end of May I returned money to every single investor,” she told Fox.
Philippe Laffont’s Coatue Management revised its first quarter 13F to account for an additional $29 million in U.S. equities. The New York firm says in the new filing it had nearly $10.527 billion in the portfolio as of March 31. Coatue Offshore Fund was up about 1.5 percent through April, according to a hedge fund database.
Shares of Mannkind once again plummeted, falling nearly 9 percent on more than triple its normal daily volume. The stock is now down more than 15 percent in two days following our profile of Jason Karp, founder of New York–based Tourbillon Capital Partners, who said he believes the biotechnology company’s stock is “worthless.”