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Hedge Fund Run by Ex-Bondsman Is Ponzi Scam, SEC Says
By David Scheer, Bloomberg
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(January 21, 2009 - Wednesday) - Hedge Fund Run by Ex-Bondsman Is Ponzi Scam, SEC Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=a19JJSLP2A5M&refer=home
By David Scheer
Jan. 21 (Bloomberg) -- A former Texas bail bondsman who told investors he ran a $45 million hedge fund and installed a swimming pool at his office was sued by U.S. regulators for allegedly operating a Ponzi scheme.
Rod Cameron Stringer of Lamesa misappropriated millions of dollars from investors since 2001 while touting a trading strategy he said had annual profits of as much as 61 percent, the Securities and Exchange Commission said in a suit at federal court in Lubbock, Texas. A Federal Bureau of Investigation probe shows he raised at least $8.5 million since 2007 and had losses while investing less than a fifth of the cash, the SEC said.
“Stringer’s claims regarding the hedge fund and the high rates of return are completely bogus,” the agency said in the suit. Besides running the fund, the agency said the 43-year-old worked as a used-car salesman, a tow-truck driver and a crop- dusting pilot.
Bernard Madoff’s alleged $50 billion Ponzi fraud and declines on global markets are leading regulators to question money managers who claim to deliver consistent profits. Federal authorities are probing other managers suspected of similar swindles of as much as $1 billion, people familiar with the matter said Jan. 2.
Dan Hurley, a lawyer representing Stringer at Hurley & Guinn in Lubbock, declined to comment. A judge froze Stringer’s assets and appointed a receiver to recover investor funds, according to the SEC.
Elderly Investors
Stringer, doing business as RCS Hedge Fund, managed money from 31 investors, many elderly, according to the agency’s complaint. The location of the remaining investor money “is presently unknown,” it said. Some was spent for the pool at his office, a horse-racing partnership, a boat, and mortgages for at least two houses, it said.
Stringer and his fund weren’t registered with the SEC and he has never held a securities license, the agency said.
In a Ponzi scheme, investors are typically paid returns from cash received from later participants. Of the money raised since 2007, Stringer has distributed at least $2.4 million as purported investment gains, the SEC said.
Madoff, 70, was charged with securities fraud Dec. 11 at federal court in Manhattan after allegedly telling his sons his New York-based investment advisory business had been “one big lie” and that he was “finished.” After filing suit against him last month, the SEC admitted it had failed to detect his alleged fraud, even after receiving “credible and specific” complaints about the New York money manager for years.
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