Michael Lauer to Pay More than $62 Million in Hedge Fund Fraud Case
Damages Determined in Hedge Fund Fraud Case Judge Marra Orders Heavy Amount Against Lauer
In the case brought forth by the SEC against Michael Lauer for hedge fund fraud, the U.S. Disctrict Judge for the Southern District of Florida determined that Lauer must pay back $62 Million in damages. On September 24th, 2008, the SEC announced that a district court judge granted its motion for summary judgment against Michael Lauer, head of Lancer Management Group. Lauer was found liable for violating the anti-fraud provisions of the federal securities in his attempt to defraud investors, which resulted in the loss of hundreds of millions of dollars in investors’ funds
Lauer’s case serves as a stark example to hedge fund managers who contemplate engaging in fraudulent conduct in the hopes of financial gain. Lauer has been criminally indicted in the Southern District of Florida, and his trial is currently scheduled for March 2010.
The full text of the SEC press release on this matter is reprinted below, and can also be found here
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Michael Lauer to Pay More than $62 Million in Hedge Fund Fraud Case
The Securities and Exchange Commission announced today that Michael Lauer, the head of two Connecticut-based hedge fund advisors, has been ordered to pay more than $62 million within 15 days as a result of being found liable on SEC fraud charges last fall. (insert pdf)
S. District Judge Kenneth Marra for the Southern District of Florida found that Lauer, head of Lancer Management Group and Lancer Management Group II, must pay more than $43.6 million to deprive him of his ill-gotten gains, and more than $18.9 million in prejudgment interest.
“This is a victory for investors and a cautionary tale for hedge fund managers who line their pockets with ill-gotten gains,” said David Nelson, Director of the SEC’s Miami Regional Office. “We are pleased the court agreed that the fraudulent conduct warranted this judgment.”
According to the SEC’s complaint in the case, Lauer raised more than $1.1 billion from investors over several years by misrepresenting the nature of and returns on his investments, and caused investors to lose approximately $500 million of that amount.
The judge’s order also gives the SEC 30 days to recommend a specific penalty amount that Lauer should pay in addition to disgorgement of his ill-gotten gains. Lauer has been criminally indicted in the Southern District of Florida for the same conduct underlying the SEC’s action. His trial is currently scheduled for March 2010.
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