Professionals associated with the alleged phony hedge fund A.R. Capital – including lawyers, accountants and the brokers that cleared its trades – are all in the legal crosshairs of victims of the fraud, The Post has learned.
Robert S. Banks, the Portland, Ore.-based lawyer for 10 victims of A.R. Capital, said a lawsuit against the principals of the now-shuttered hedge fund and its professionals was being readied and could be filed in either New York or Albuquerque, N.M., shortly.
“As evil as the [A.R. Capital] promoters were,” said Banks, “they could not have gotten away with their scheme without the help of lawyers and accountants to do the necessary paperwork, and lay the groundwork for the crime.”
As The Post first reported exclusively last week, at least five fraudsters, playing off Americans’ fascination with the high returns of hedge funds, scammed dozens of investors out of a total of $30 million over three years by posing as successful hedge fund managers.
They were able to continue the alleged fraud by sending investors phony statement showing rosy returns. It was all a fraud and A.R. Capital, run out of a seventh floor office at 39 Broadway, is now shuttered and the executives are into the wind.
One victim, an 81-year old retire engineer, lost as much as $700,000 to the scam. He initially invested $5,000 after he received a cold call from one of the executives. The victim, Edward Bacon, then increased his investment after getting statements showing his cash had doubled in six months.
The FBI and the Securities and Exchange commission are said to be investigating the matter.
In addition, a sealed indictment in the case is said to have been handed up by a grand jury empaneled by Michael J. Garcia, the U.S. Attorney in Manhattan.
Spokespersons for each office declined comment.
Banks said investors are unlikely to recover much.
Federal authorities are said to have frozen assets that reputedly belonged to the disgraced hedge fund. However, the amount involved is said to be miniscule, perhaps as little as $50,000, according to a person familiar with the situation.
A.R. Capital had a relationship with HSBC, according to Banks, and provided foreign exchange prime brokerage, executing and trading services.
HSBC has not been charged or implicated in any alleged A.R. Capital fraud.
A spokesperson for HSBC Bank declined to comment.