Hedge fund founder guilty in $150 mln fraud scheme

Date: Thursday, May 22, 2008
Author: Reuters.com

WASHINGTON, May 21 (Reuters) - A federal jury in Atlanta on Wednesday convicted former hedge fund manager Kirk Wright on charges of scamming investors, including former professional athletes, out of $150 million, the Justice Department said.

Kirk was found guilty on charges of mail fraud, securities fraud and money laundering relating to the 2006 collapse of his Atlanta-based investment firm, International Management Associates (IMA), the Justice Department said.

IMA also had offices in New York, Los Angeles and Las Vegas and thousands of clients. Evidence presented in his two-week trial showed Wright had been lying to investors since 2001 about investment performance and their account balances, the Justice Department said.

The government presented as evidence fabricated records and material showing he diverted investors' money for personal use, including cash for himself and family members, luxury cars, jewelry, house renovations and a $500,000 wedding.

IMA collapsed in 2006, after several investors requested distribution, received bad checks and filed lawsuits. The investor group included several former National Football League players who were among victims who testified at the trial.

"A measure of justice was served today for the hundreds of investor-victims in the stunning collapse of International Management Associates," U.S. Attorney David Nahmias said. "Those victims poured more than $150 million into Wright's hedge funds over the years, only to find in 2006 that the money was gone and that Wright had lied to them for years."

Wright could receive a sentence of up to 710 years in prison, a fine of up to $16 million and restitution for victims' loses. He remains in custody and is scheduled for sentencing on Aug. 26.

Wright fled Atlanta as his firm collapsed, taking with him $500,000 in cash -- almost all of the remaining money in IMA's accounts, the Justice Department said.

He was arrested several months later, poolside at a hotel in Miami Beach, Florida, where he was staying under an alias. (Writing by JoAnne Allen; Editing by Braden Reddall)