Former Hedge Fund Manager Pleads Guilty to Fraud

Date: Monday, December 14, 2009
Author: New York Times

A jailed hedge fund manager in New York whose fraud was revealed in the investigation of the Bernard L. Madoff scandal admitted in court on Friday that he fabricated client account statements and overstated asset values by hundreds of millions of dollars. The former manager, James Nicholson, the former president of Westgate Capital Management, pleaded guilty in United States District Court in Manhattan to securities fraud, investment adviser fraud and wire fraud. Federal prosecutors estimated losses of $133 million.

Mr. Nicholson, 43, told the judge that he created fictitious account statements for more than 250 clients, many of them suburban residents of New York and New Jersey. He said most of the misrepresentations were made after the collapse in September 2008 of Lehman Brothers Holdings, in which his funds were invested. He faces a maximum penalty of 45 years in prison.