Hedge Fund Focus

Former MA Investment Adviser Sentenced to Ten Years for Defrauding Investment Advisory Clients

On May 14th, 2009, Amit Mathur was sentenced to ten years in federal prison on federal mail and wire fraud for defrauding his investment advisory clients.  The Commission filed its action against Mathur and his advisory firm (Entrust Capital Management) on April 12, 2005, and filed an Amended Complaint adding Rajeev Johar as a defendant on September  14, 2005.   Following Mathur’s criminal conviction, the Commission issued an order barring Mathur from association with any investment advisor.

The following SEC release reprinted in full, can be found here.  For more information on this case, please see the following related SEC press releases:

• Commission Obtains Temporary Restraining Order and Asset Freeze Against Massachusetts Investment Adviser Accused of Misappropriating Millions from Clients
• Commission Obtains Preliminary Injunction and Asset Freeze Against Massachusetts Investment Adviser Accused of Misappropriating Millions from Clients
• Commission Obtains Preliminary Injunction and Asset Freeze Against Louisiana Investment Adviser Accused of Misappropriating Millions from Clients
• Court Enters Final Judgment Against Investment Adviser Accused of Misappropriating Client Funds
• Former Massachusetts Investment Adviser Found Guilty of Fraud; Louisiana Partner Faces Criminal Charges
• ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS
• ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS PURSUANT TO SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940

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Former Massachusetts Investment Adviser Sentenced to Ten Years for Defrauding Investment Advisory Clients

The Securities and Exchange Commission announced today that on May 11, 2009, in a case prosecuted by the United States Attorney for the District of Massachusetts, a federal judge sentenced investment adviser Amit Mathur, age 38, of Shrewsbury, Massachusetts, to ten years in federal prison on federal mail and wire fraud for defrauding his investment advisory clients. Upon release from imprisonment, Mathur will be placed on supervised release for three years. The Court also ordered Mathur to pay restitution in the amount of $12,572,237.28 and a special assessment of $2,000.00. Mathur, who operated an advisory firm called Entrust Capital Management, Inc., in Worcester, Massachusetts, is also a defendant in a Commission civil action filed in April 2005.

Mathur was initially indicted on criminal charges on Sept. 28, 2006. At Mathur’s two-week long criminal trial in May 2008, evidence was presented that Mathur, beginning in 2001, raised several million dollars in investor funds and dissipated millions in investor funds through undisclosed trading losses, unauthorized use of investor funds, and use of client funds for Mathur’s personal expenditures. According to evidence presented at the criminal trial, Mathur used investor funds to, among other things, buy a Porsche Cayenne, purchase Mercedes Benz luxury vehicles, and fund gambling trips to Las Vegas for Mathur and his friends. A federal jury found Mathur guilty on May 16, 2008.

The Commission filed its action against Mathur and Entrust on April 12, 2005, and filed an Amended Complaint adding Rajeev Johar as a defendant on Sept. 14, 2005. The Commission’s Amended Complaint alleged that, from 2000 through 2005, the defendants engaged in a scheme to defraud investors in a purported hedge fund run by Mathur and Johar at Entrust. The Amended Complaint alleged that approximately twenty clients invested over $16 million with Entrust. The Commission alleged that the defendants made material misrepresentations to investors about, among other things, their assets under management and returns that the fund generated. According to the Amended Complaint, the defendants dissipated most of the $16 million invested through undisclosed trading losses and misappropriation of investor funds for the defendants’ personal use. The Commission’s action against Mathur, Entrust, and relief defendant AMR Realty, LLC, is pending. A Final Judgment by consent was entered against Johar in the Commission action on June 4, 2007, which, among other things, ordered him to pay over $600,000 in disgorgement of ill-gotten gains, prejudgment interest, and penalties. In separate administrative proceedings, the Commission issued an Order by consent on June 26, 2007, barring Johar from association with any investment adviser. In separate administrative proceedings following Mathur’s criminal conviction, the Commission issued an Order by consent on July 14, 2008, barring Mathur from association with any investment adviser. [SEC v. Amit Mathur, et al. (United States District Court for the District of Massachusetts, C.A. No. 05-10729 (MLW)] (LR-21037)

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