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Hedge Fund Manager Sentenced To Prison

Date: Tuesday, October 16, 2007
Author: WNBC.com

NEW YORK -- A former hedge fund manager was sentenced to three years in prison Monday after he pleaded guilty to securities fraud, admitting that the scheme cost investors $88 million.

John H. Whittier, 41, of Hailey, Idaho was also ordered to forfeit $5.5 million. U.S. District Judge Jed S. Rakoff told him to surrender on Jan. 15 to federal prison authorities.

Whittier pleaded guilty in May, admitting that he promised investors in his Wood River U.S. and Wood River Cayman hedge funds that no more than 10 percent of the hedge funds' holdings would be invested in the stock of any one company.

Prosecutors said he then invested approximately 85 percent of Wood River U.S.'s $127 million portfolio in a single stock, gaining ownership of 80 percent of the common stock of Endwave Corp. In September 2005, Endwave's stock price dropped dramatically.

They said he also falsely told investors that the hedge fund was being audited when it was not, and he failed to make required filings with the Securities and Exchange Commission.