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SEC Charges Hedge Fund Manager in Investment Fraud Case

The Securities and Exchange Commission (SEC) has charged a Marin hedge fund manager for fraud for his alleged participation in an investment scam involving over $12 million. Larry Goldfarb has entered into an agreement with the U.S. Attorney and has admitted to one count of wire fraud.It has also been reported that Mr. Goldfarb, who runs BayStar Capital Management, admitted to transferring about $12 million of investors’ funds to two of his entities and used funds to invest in Marin real estate. He also allegedly used some of the funds for an investment in a San Francisco record company and to make several charitable contributions. The U.S. Attorney’s office has agreed not to bring charges against Mr. Goldfarb, if he agrees to pay $12.1 million in restitution to BayStar investors, as well as agrees to a three-year ban from the investment industry. The SEC has accused the 52-year-old Mr. Goldfarb of San Anselmo, of misusing funds since at least 2006 to invest in what they describe as highly profitable “side-pocket” investments. The SEC also says that Mr. Goldfarb deposited the side-pocket proceeds "into the bank account of one his related entities, which he used to pay for unauthorized personal expenses including entertainment and charitable donations."Mr. Goldfarb was able to settle with the SEC without having to admit or deny guilt.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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