Hard as it is to believe, a venture capital firm allegedly has gotten in trouble for the type of activity that usually snags hedge funds. The Securities and Exchange Commission has sued Keystone Venture Management Holdings along with managing directors Michael Liberty, Kieran Dale, John Regan and Peter Ligeti for misappropriating more than $9 million from investors, most of which were public Pennsylvania pension plans. According to the lawsuit, filed in U.S. District Court for the Eastern District of Pennsylvania, Liberty and Dale worked together in the scheme that diverted investor money to Liberty and others, and they allegedly covered it up by “creating false and misleading financial statements.” Ligeti, for his part, was charged for having discovered evidence of the misdeeds, but failing to disclose that information for more than a year. All the parties – except for Liberty – have agreed to settle the accusations against them, without admitting or denying the charges, and will each pay a $50,000 fine and total disgorgement of $1 (yes, $1). Dale was ordered to disgorge $1.37 million, but he pleaded poverty and the SEC waived the payment. Liberty denies all charges.
