Hedge Fund Managers Sentenced to Prison for €30 Million Fraud Scheme in Malta

Two former hedge fund managers, Thomas Repke and James Jeffery, have been sentenced to prison for their role in a massive fraud scheme that defrauded over 200 investors of tens of millions of euros. The scheme, which was uncovered by investigators, involved the use of fraudulent escrow accounts and the transfer of millions of euros overseas to fund lavish lifestyles.

The Fraud Scheme

Coadum Capital Advisors, a Utah-based hedge fund operator, promised investors high returns on their investments. However, instead of investing the money as promised, Repke and Jeffery used it to fund their own lavish lifestyles, including paying themselves hundreds of thousands of euros in cash and transferring millions more overseas to accounts in Switzerland and Malta.

Targeted Investors

The men targeted vulnerable investors, including seniors and retirees, by telling them that their money would be protected in escrow accounts. However, in reality, the funds were never actually held in these accounts, and Repke and Jeffery used the money to fund their own business expenses and personal ventures.

Investigation Finds Fraud

The fraud was uncovered when investigators discovered that the men had transferred millions of euros overseas to accounts in Malta, where they claimed to have invested it in a series of hedge funds. However, an investigation found that none of these investments produced any earnings, and by the end of 2007, only a fraction of the transferred funds remained deposited in these European accounts.

Sentencing

Repke was sentenced to 10 years in prison, followed by five years of supervised release, while Jeffery received a sentence of seven years and three months. Both men were ordered to pay €29,740,180 in restitution to over 200 victims.

Response from Law Enforcement

The case is seen as a major victory for law enforcement agencies, who have been working to crack down on financial fraud schemes around the world. “These corrupt managers defrauded innocent people out of tens of millions of euros, and now they will face the consequences,” said United States Attorney Sally Quillian Yates.

Investigation Conducted by

The investigation was conducted by the FBI, in cooperation with the Securities and Exchange Commission, and is part of President Barack Obama’s Financial Fraud Enforcement Task Force.