Reuters – A hedge fund manager overstated values by hundreds of millions of dollars, set up a phony accounting firm and showed uniformly positive returns for nine years to defraud investors, U.S. authorities said on Wednesday. <\/p>\n
James Nicholson, 42, founder of Westgate Capital Management LLC of New York, was arrested and criminally charged with securities fraud and bank fraud in causing losses of as much as $100 million since 2004, prosecutors and the FBI said.<\/p>\n
He appeared in U.S. Magistrate’s Court in Manhattan where a judge set bail of $10 million secured by five co-signors and three properties. The judge ordered Nicholson released when he meets those conditions, but he would be under house arrest with electronic monitoring.<\/p>\n
Prosecutor Joshua Klein told the court the purported fraud could effect 372 investors. "There is a potential additional hundreds of millions of dollars involved and we have no idea where that money is," Klein said.<\/p>\n
Nicholson’s attorney Ira Sorkin said in court that his client was not a risk of flight and that home detention was sufficient to ensure court appearances.<\/p>\n
Sorkin, a veteran securities attorney, represents Bernard Madoff, the once-respected Wall Street trader and investment manager arrested and charged in December with a purported $50 billion global fraud.<\/p>\n
Investigators say they have uncovered several frauds across the United States in recent months following the market meltdown.<\/p>\n