Hedge fund manager Keith Gilabert has pleaded guilty to criminal conspiracy in connection with a securities fraud, the Los Angeles Times reports, and may yet end up in jail for five years. As part of the plea, the founder of Capital Management Group of Valencia, Calif., has agreed to cooperate with the Securities and Exchange Commission and the Department of Justice in their investigation of the firm, which, like Gilabert, has been charged with misleading customers into investing with promises of 27% returns and then losing up to $14 million of their money through alleged misappropriation of funds. The Justice Department alleges that Gilabert himself took $2.5 million of investor money for his personal use. According to the Times, Gilabert’s cooperation may help nail an alleged co-conspirator, an unidentified person reportedly working for a major brokerage who allegedly helped lure investors to GLT Venture, a fund Gilabert ran. But the Times says that one unhappy investor who sued Capital Management in a civil action last year says he was persuaded to invest $4 million in Capital by a broker from UBS Financial Services.
