A Portland hedge fund manager has pleaded guilty to 17 counts of fraud in a Ponzi scheme that defrauded investors in Oregon, Washington, California, and other states, announced the U.S. Attorney’s Office for the District of Oregon last week.
Contrary to what he told investors, Jawed invested very little of the investors’ funds. Instead, he diverted the majority of the money to pay unrelated expenses.
In Sept. 2012, the SEC filed a complaint against Yusaf Jawed that accused him of using false marketing materials to persuade at least 100 investors across the Pacific Northwest to invest more than $37 million in several of the hedge funds he managed. He also allegedly “created phony assets, sent bogus account statements to investors, and manufactured a sham buyout of the funds to make investors think their hedge fund interests would soon be redeemed,” said the SEC.
Each federal fraud count carries a maximum sentence of 20 years in prison, but Jawed will likely serve less time. As part of his plea agreement, both the defense and the prosecution have agreed to recommend a sentence of 6 ½ years in prison, plus payment of restitution and forfeiture of ill-gotten gains.
Sentencing is scheduled for June 21. For additional information on the Yusaf Jawed investment fraud case, click here.