US prosecutors have accused Paul Eustace, founder and principal trader of the
now defunct Philadelphia Alternative Asset Management Company (PAAM), of
creating accounts which showed his hedge fund was making money when in fact it
was losing tens of millions of dollars.
He was also charged with increasing his management fees based on bogus
accounts, and making loans to himself with investors’ cash, including $US500,000
(?239,000) to pay off a legal settlement.
According to a two-count fraud indictment, Eustace opened several accounts at
Group brokerage, including one called the ‘10 account’, where profitable
trades were placed, and one called the ‘50 account’, where losing trades were
held, FT.com reports.
He also opened an account at
UBS, which was administered by
the Swiss bank’s Cayman Island operations.
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