Criminal Securities Fraud News: Hedge Fund Founder Gets 12 Years for Fraud, Research Firm Executive Goes to Prison for Insider Trading, and Holding Firm CEO Enters Guilty Plea to Conspiring to Bribe Brokers

Hedge Fund Founder Gets 12 Years for Investment Fraud
Albert Ke-Jeng Hu, the hedge fund founder of Fireside LS and Asenqua Beta Fund, is to serve 12 years behind bars for running an investment fraud scam. Prosecutors say that he lied to clients and told them his funds contained over $200 million while promising they would get returns of up to 30%.

The US government, however, says none of this was true and that Hu placed “virtually none” of investors’ money into the funds and instead, used the cash to pay off earlier investors and cover his personal spending. Last year, Ke-Jeng Hu, who was extradited from Hong Kong in 2009, was convicted of seven counts of wire fraud. The Securities and Exchange Commission’s related securities case against him has not yet been resolved.

Research Firm Executive Goes to Prison for Insider Trading
Broadband Research LLC President John Kunnucan has been ordered to serve over four years in prison for insider trading, securities fraud, and conspiracy to commit this fraud. He is accused of charging fees as high as $27,500 and other non-monetary compensation to employees of public companies, such as Sandisk Corp. (SNDK), for the information.

The government says that Kinnucan would get inside information about publicly traded companies and then sell the information to hedge fund clients. He then would allegedly lie to clients, telling him that the information wasn’t from corporate insider and had not cost him anything.

Holding Firm CEO Enters Guilty Plea to Conspiring to Bribe Brokers
Roland Kaufmann, the CEO of Axius Inc., has pleaded guilty to being involved in a conspiracy to bribe brokers in an effort to raise the Dubai-based holding company’s stock price. The US government says that Kaufmann admitted to violating the Travel Act, which makes commercial bribery a crime and doesn’t allow foreign or interstate commerce to be used to perpetuate activities that violate federal and state bribery laws.

Prosecutors contend that Kaufmann and Jean Pierre Neuhaus, his co-defendant, went to someone that they thought could connect them with stockbrokers who were corrupt and might purchase Axius shares in return for a “secret kickback.” The person they approached was actually an undercover agent. The SEC’s securities case against the two men has not yet been resolved.

Securities Fraud
Victims of securities fraud may be able to recoup their losses via arbitration or litigation. These cases are separate from criminal proceedings. The best way to ensure the success of your securities claim or lawsuit is to be represented by an experienced investment fraud law firm.

Research Firm Exec Gets 51 Months in Scheme, Bloomberg/BNA, January 16, 2013

Ex-Axius Chief Kaufman Pleads Guilty in Manipulation Case, Bloomberg, January 11, 2013 Broadband Research’s Kinnucan Gets 4 Years in Insider Case

Broadband Research’s Kinnucan Gets 4 Years in Insider Case, SF Gate, January 21, 2013

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Morgan Stanley & Goldman Sachs Settle Federal Homeowner Foreclosure Complaints for $557 Million, Stockbroker Fraud Blog, January 16, 2013

Credit Suisse Must Face ARS Lawsuit Over Subsidiary Brokerage’s Alleged Misconduct, Says District Court, Stockbroker Fraud Blog, January 11, 2013

Major Newspapers Say Judicial Arbitration by Delaware’s Court of Chancery is Unconstitutional, Institutional Investor Securities Blog, January 15, 2013