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SoCal fund manager has assets frozen in fraud case

Date: Thursday, April 30, 2009
Author: Jacob Adelman, AP

A federal judge on Wednesday froze the assets of a Beverly Hills hedge fund manager accused by the Securities Exchange Commission of duping investors out of $38 million by misleading them about his funds' performance, the commission said in a statement.

U.S. District Judge Valerie Baker Fairbank's injunction also prohibited Bradley L. Ruderman from destroying any documents connected to the fraud complaint and from any future violations of U.S. antifraud provisions.

Ruderman and his firm, Ruderman Capital Management, are accused of telling investors that its two hedge funds held more than $800 million in assets when they actually had less than $700,000, according to the SEC complaint.

Ruderman gave the funds' approximately 20 investors misleading account statements between 2002 and 2009 that showed consistent yearly gains, while millions were being lost, the SEC said.

On at least one occasion, Ruderman used new investors' funds to pay an earlier investor in a Ponzi-like transfer, the SEC said.

The commission also accused Ruderman of falsely telling investors that the funds held positions in well-known securities such as Apple Inc. and Microsoft Corp. and that Oracle Corp. chief Larry Ellison and other prominent figures had invested in the funds.

"Ruderman was willing to say or do anything to persuade investors to entrust their money to him, particularly when his scheme was unraveling," said Rosalind R. Tyson, director of the SEC's Los Angeles regional office, said in a statement.

Ruderman's lawyer Wrenn Chais did not immediately return a call by The Associated Press seeking comment.

The SEC is seeking to have Ruderman's assets placed into receivership and to have money garnered through the alleged scheme returned with interest. The commission is also seeking civil penalties.

A hearing on whether a preliminary injunction should be issued against Ruderman and whether a permanent receiver should be appointed is scheduled for May 7.