New York (HedgeCo.net) – The SEC unsealed an emergency court order halting an alleged Ponzi scheme by a hedge fund trader in the Dallas-Fort Worth area.
Chris Blackwell is alleged to have sold investments in a phony fixed income trading program. The hedge fund trader came under investigation due to large wire transfers and cash transactions. While pitching his trading program to an undercover agent whom Blackwell thought was a wealthy potential investor, he made numerous false and misleading representations including risk-free returns of “25 to 30 percent per month with regularity.”
“Blackwell concocted a resume boasting degrees he never earned, work experience he never had, and personal connections he didn’t make,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office. “Blackwell enticed investors by promising exorbitant returns and assuring that their principal amount would be held safely in an escrow account. In reality, Blackwell was misappropriating their money in a myriad of ways.”
“Blackwell spent nearly $3 million in investor money on questionable unrelated business activities as well as such personal expenses as child support, gentlemen’s club entertainment, and purchases of expensive vehicles. He also made approximately $500,000 in Ponzi-like payments using money from new investors to pay earlier investors.”The SEC said.
According to the SEC’s complaint, during a Feb. 11, 2010, face-to-face conversation with an undercover agent, Blackwell touted the know-how and connections he acquired while employed by Goldman Sachs and The Bank of Madrid. In reality, Blackwell never worked at either firm.
The SEC alleges that Blackwell misused investor money to pay more than $720,000 in personal and business expenses, including child support, travel, entertainment (including gentlemen’s clubs), utilities, food, office equipment and supplies, office rent, and purchases of an Audi, Hummer and other vehicles. Blackwell also funneled more than $900,000 in cash directly to himself, family members, friends and other associates. He further diverted investor funds to support other questionable business activities, including roughly $249,000 purportedly used to fund a personal entertainment investment and roughly $1.1 million to purchase interests in sham letters of credit. Separately, Blackwell used more than $500,000 to make Ponzi-like payments.
The Judge granted the SEC’s request for emergency relief, including an order temporarily restraining Blackwell from committing further violations of the antifraud provisions and an order freezing Blackwell’s assets.
Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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