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SEC Targets Hedge Fund Swindler

Date: Monday, October 6, 2008
Author: Julie Scuderi, HedgeCo.net

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The SEC has targeted hedge funders David Myatt and William Eichengreen, both of Directors Performance Fund, with charges of fraud. 

The two men allegedly took $25 million of their investment advisors money and put it into a “prime bank” scheme.  This kind of scheme generally involves investors fraudulent claims that funds will be used to purchase “prime” financial instruments, usually in overseas markets, with the promise of high returns.  Most of the time, neither the instruments nor the markets they supposedly trade on through special “access” even exist.  In this case, Myatt and Eichengreen promised returns in excess of 10% per week with minimum risk.

Eichengreen then falsified documents pertaining to performance while lying about the fund strategy and asset allocation.  The hedge fund also raked in performance fees that were based on the doctored numbers. 

Investors in the fund should receive their money back, after a previous suit resulted in the court being responsible for distributing the assets back to investors.  Myatt also previously pleaded guilty to an obstruction of justice charge that was brought against him in connection with this hedge fund.