Hedge Fund Fraud Strikes New Jersey

Jersey City, NJ is now famous, or rather should that be infamous. In addition to serving as the location of Corgentum's headquarters Jersey City is now also in the news for being the former home Osiris Partners, a hedge fund firm accused of fraud. It was reported today that New Jersey state officials have sued Osiris over charges that it defrauded investors and sold approximately $12 million worth of unregistered securities. The scheme allegedly defrauded over 75 investors from 2009 to 2011. Investors seemed to have poured money into the firm's flagship Osiris Fund, when it produced returns of over 273% in 2009. Earlier this year in January it was reported that the Osiris partner Peter Zuck had fled with investors money. Additionally, reports also indicated that the firm's former CEO Michael Spak was the one who first report Mr. Zuck to the FBI. Similar to many other hedge funds frauds such as Bayou, the Osiris Fund, did not preclude investors from subscribing with a minimum of $1 million or more. Instead, the firm took a more retail marketing approach with minimum investment of only $150,000. In an interview with FINalternatives in January 2010 Mr. Spak said, When we decided to go against the grain of the hedge fund industry and create a fund for all, not just the millionaire and billionaire clients, I knew in my head and my heart it was the right business model. Interestingly, it was also reported that a background check on Mr. Zuck revealed that beginning in 1995 he spent over a year in a New Jersey prison after being found guilty of "misconduct by a corporate official." The current legal proceeding outline that Mr. Zuck was a three-time convicted criminal. Another huge red flag. We allege these defendants enriched themselves by pocketing at least $4 million of investors hardearned money from the fund while they concealed substantial losses, Attorney General Jeff Chiesa said in a statement. This case clearly illustrates why we urge consumers to perform their due diligence before investing their money, said Eric Kanefsky, acting director of the state Division of Consumer Affairs. The potential for hedge fund fraud is everywhere and investors need to perform initial and ongoing operational due diligence to ensure that they are not involved in similar alleged fraudulent schemes.
Originally posted on the Corgentum Consulting blog at www.Corgentum.com/blog For More Information

Jason Scharfman, Managing Partner info@corgentum.com Corgentum.com | Blog | Twitter Feed Tel. 201-360-2430

2012 Corgentum Consulting, LLC