Ridgefield hedge fund partner gets 33 months [funds based in Cayman Islands]
By Alexander Soule From Financial Mines Connecticut
David Bryson, 46, a former managing partner of Ridgefield-based New Stream Capital, received a 33-month prison sentence for his part in a fraudulent scheme that ultimately defrauded investors of $46 million.
Bryson collected more than $5 million in management fees and profit sharing while participating in the scheme.
Prosecutors say that in November 2007, New Stream launched new feeder funds, one based in the United States and a series of funds based in the Cayman Islands. New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund.
Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, Prosecutors said, Bryson, co-managing partner Bart Gutekunst and chief financial officer Richard Pereira decided to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption.
New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open, or that it was being given priority over the Cayman Fund; and concealed from investors the magnitude of the actual pending redemptions.
“In an effort to protect their own invested money and to collect more than $5.8 million in additional fees, New Stream executives devised and promoted a series of misrepresentations carefully calculated and designed to keep existing-investors in the dark about the true risk of the fund and to deceptively raise millions of dollars in new investments in an effort to keep their fund viable,” said Michael Gustafson, stated first assistant U.S. Attorney for the state of Connecticut, in a prepared statement.
For more on this story go to: http://blog.ctnews.com/financialmines/2015/05/05/ridgefield-hedge-fund-partner-gets-33-months/
Related stories:
Connecticut hedge fund leader receives 2 years in prison
By Associated Press From NEWS 8 wtnh.com
NEW HAVEN, Conn. (AP) — A man who fought drug trafficking in the Caribbean as a U.S. Navy officer before beginning a finance career in Connecticut was sentenced Tuesday to two years and nine months in prison for misleading investors about accounts in the Cayman Islands.
David Bryson, who was sentenced in New Haven federal court, is among three former executives of Ridgefield, Connecticut-based hedge fund New Stream Capital to plead guilty in a fraud prosecutors say caused losses of more than $46 million. Prosecutors say the defendants orchestrated a scheme to secretly keep an offshore fund open to prevent an investor from withdrawing funds.
Bryson, a graduate of the U.S. Naval Academy, pleaded guilty last May to a federal conspiracy charge.
Prosecutors sought a five-year sentence for Bryson, arguing in a court filing that he and two other defendants “devised and promoted a series of lies carefully calculated and designed to keep existing investors in the dark about the true risk of the fund and to deceptively raise millions of dollars in new investments in an effort to keep their fund viable.”
Defense attorneys said the crime was out of character for Bryson, who served aboard a Navy destroyer for three years and led searches of vessels suspected of smuggling drugs.
“David is simply not the type of man one would ever expect to find convicted of this offense,” his attorneys wrote. “He is a core member of his community and church, a dedicated family man, a hardworking and honest businessman and a proud Navy veteran.”
In 2007, New Stream told foreign investors that a fund would be closing and they would have to move their investments into new funds in the Cayman Islands. At risk of losing their largest investor, the three defendants set in motion a scheme to secretly keep the fund open and give priority to certain investors, prosecutors said.
New Stream failed to inform investors who had transferred into the Cayman Islands fund that the existing fund was remaining open or that it was being given priority over the Cayman Islands fund, prosecutors said.
The others who pleaded guilty are Bart Gutekunst and Richard Pereira.
For more on this story go to: http://wtnh.com/2015/05/05/connecticut-hedge-fund-leader-receives-2-years-in-prison/
Connecticut Hedge Fund executives charged with conspiracy, securities fraud, and wire fraud offenses
U.S. Department of Justice February 26, 2013
District of Connecticut (203) 821-3700
NEW HAVEN, CT—A federal grand jury sitting in New Haven has returned a 19-count indictment charging three executives of New Stream Capital LLC, a Ridgefield, Connecticut hedge fund, with conspiracy, securities fraud, and wire fraud offenses, announced David B. Fein, U.S. Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the New Haven Division of the FBI.
David Bryson, 44, of Ridgefield, Connecticut; Bart Gutekunst, 61, of Weston, Connecticut; and Richard Pereira, 40, of Ridgefield, surrendered this morning to the FBI in New Haven. Bryson and Gutekunst were managing partners and principals at New Stream Capital LLC, and Pereira was the chief financial officer. The defendants appeared before U.S. Magistrate Judge Donna F. Martinez in Hartford, Connecticut, and pleaded not guilty to the charges. Bryson and Gutekunst were released on $5 million bonds and Pereira was released on a $300,000 bond. The indictment, which was returned on February 22, 2013, was unsealed at that time.
“As alleged, fearing the loss of their fund’s largest investor, these defendants orchestrated a scheme to deceive investors in order to obtain and maintain investments,” stated U.S. Attorney Fein. “The U.S. Attorney’s Office and our many partners on the Connecticut Securities, Commodities and Investor Fraud Task Force are committed to protecting investors and the integrity of American capital markets.”
“It goes without saying that investing carries certain risks,” stated FBI Special Agent in Charge Mertz. “Those risks, however, should not include any chance that hedge fund managers or other investment professionals are lying to or deceiving their investors about the current state of investments. Investors have a right to full disclosure. Today’s arrests underscore the FBI’s continuing commitment to investigate those who provide material misrepresentations to investors.”
According to the indictment and statements made in court, in November 2007, New Stream launched new feeder funds, one based in the United States (U.S. Fund) and a series of funds based in the Cayman Islands (Cayman Fund). New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund. Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, it is alleged that Bryson, Gutekunst, and Pereira set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption. As part of the scheme, Bryson, Gutekunst, and Pereira had New Stream staff secretly reorganize the fund structure so as to effectuate the priority change.
The indictment further alleges that New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open or that it was being given priority over the Cayman Fund. Moreover, New Stream continued to market New Stream to investors by concealing from them the magnitude of the actual pending redemptions and by using deceptive marketing materials that failed to disclose the existence of New Stream’s Bermuda Fund.
Each of the defendants is charged with one count of conspiracy, 10 counts of securities fraud and eight counts of wire fraud. The conspiracy charge carries a maximum term of imprisonment of five years, and the securities fraud and wire fraud charges carry a maximum term of imprisonment of 20 years on each count.
This matter is being investigated by the FBI and the U.S. Department of Labor, Office of Inspector General, with the assistance of the Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorneys Liam Brennan and Michael S. McGarry.
The Connecticut Securities, Commodities and Investor Fraud Task Force investigates matters relating to insider trading, market manipulation, Ponzi schemes, investor fraud, financial statement fraud, violations of the Foreign Corrupt Practices Act, and embezzlement. The task force includes representatives from the U.S. Attorney’s Office; FBI; Internal Revenue Service-Criminal Investigation; U.S. Secret Service; U.S. Postal Inspection Service; U.S. Department of Justice’s Criminal Division, Fraud Section and Antitrust Division; U.S. Securities and Exchange Commission (SEC); U.S. Commodity Futures Trading Commission (CFTC); Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Office of the Chief State’s Attorney; State of Connecticut Department of Banking; Greenwich, Connecitcut Police Department; and Stamford, Connecticut Police Department.
Citizens are encouraged to report any financial fraud schemes by calling, toll-free, 855-236-9740, or by sending an e-mail to [email protected].
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
