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Beverly Hills Fund Manager Admits to Ponzi Scheme


Date: Tuesday, August 25, 2009
Author: Joel Rosenblatt, Bloomberg

A hedge fund manager in Beverly Hills, California, pleaded guilty to operating a Ponzi scheme that caused family members to lose more than $25 million.

Bradley Ruderman, 46, appeared before U.S. District Judge John F. Walter in Los Angeles today and admitted he bilked investors out of about $44 million while claiming annual returns of as much as 60 percent, U.S. prosecutors said in an e-mailed statement. Ruderman faces as many as 51 years in prison and is scheduled to be sentenced Dec. 7, according to the statement.

Ruderman, the founder and manager of Ruderman Capital Partners, surrendered to federal agents in May. He pleaded guilty to two counts of wire fraud and two counts of investment adviser fraud, according to the statement.

Prosecutors claimed Ruderman raised $44.3 million over eight years from 22 investors, mostly family members. In April, he sent a letter to investors saying the funds were almost depleted, after he had spent $8.7 million on personal expenses, including two Porsches, and $5.2 million in poker games, according to prosecutors.

Rudermanís lawyer, James Riddet, didnít immediately return a call to his office seeking comment.

The Securities and Exchange Commission sued Ruderman in April and got an emergency court order freezing his assets. Ruderman falsely claimed that Lowell Milken, chairman of the Milken Family Foundation, and Oracle Corp. Chief Executive Officer Larry Ellison were investors in his funds, the SEC said.

The criminal case is U.S. v. Ruderman, 09-757, U.S. District Court, Central District of California (Los Angeles.) The SEC case is SEC v. Bradley L. Ruderman, 09-02941, U.S. District Court, Central District of California (Los Angeles.)

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net