Two Major Fraud Cases Reach N.Y. Federal Court

Two Major Fraud Cases Reach N.Y. Federal Court - 2/26/2009

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Two Major Fraud Cases Reach N.Y. Federal Court
Tom Hays and Larry Neumeister

Law.com. February 26, 2009
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EXCERPT: Federal authorities brought charges in two major securities fraud investigations Wednesday, saying one scheme fell apart because of publicity about the Bernard Madoff scandal. In that case, New Jersey fund manager James Nicholson, 42, was accused of defrauding investors of as much as $900 million since 2004. David Rosenfeld, associate director in the Security and Exchange Commission's regional office in New York, said the Nicholson case ranks among the largest investment frauds. "This was truly an egregious fraud of immense proportions," Rosenfeld told The Associated Press. Prosecutors said the fraud was discovered after several investors tried to redeem money from the Westgate Capital fund after hearing about the more than $50 billion fraud blamed on Madoff. In the second case, Paul Greenwood, 61, of North Salem, and Stephen Walsh, 64, of Sands Point, were charged with conspiracy, securities fraud and wire fraud. Greenwood and Walsh ran Greenwich, Conn.-based WG Trading Company LP and Westridge Capital Management Inc., based in Santa Barbara, Calif. They also had offices in Manhattan and Jersey City, N.J. According to the criminal complaint, their clients included "charitable and university foundations, retirement and pension plans and other institutions." Investors were told the money would be invested using a conservative strategy called "enhanced stock indexing" that would outperform the S&P 500. The probe began with an audit earlier this month by the National Futures Association, a Chicago-based regulatory agency for the U.S. futures industry.

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