US Hedge Fund Fraudster is Jailed

Tom Burroughes

11 April 2008

Marvin Irwin Friedman has been jailed for 72 months by a US federal court in San Diego in connection with his part in a scheme to swindle investors in the Global Money Management hedge fund, according to media reports. Mr Friedman was also ordered to pay $49 million in restitution to the victims in the case. According to Assistant US Attorneys Faith Devine and Phillip Halpern, who prosecuted the case, Mr Friedman pleaded guilty last February to diverting investor funds from the GMM hedge fund for his own personal benefit or entities which he controlled. He disseminated false and misleading account statements and his partnership tax returns overstated the performance of the GMM hedge fund. He also admitted using new GMM investor money to pay fictitious returns to previous GMM investors in order to induce those investors to send money to GMM and/or not withdraw funds the investors had already invested. Mr Friedman also admitted to making false statements on his tax returns by improperly claiming diverted GMM investor funds as capital contributions. This enabled him to take withdrawals from GMM without having to pay tax, resulting in a tax loss to the US of $481,000.