Hedge Fund Manager Conned Investors With Phony Law Firm Connections, Say Prosecutors

Hedge Fund Manager Conned Investors With Phony Law Firm Connections, Say Prosecutors - 3-19-2009

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Hedge Fund Manager Conned Investors With Phony Law Firm Connections, Say Prosecutors
Zusha Elinson

The Recorder. March 19, 2009
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EXCERPT: Law firms are happy to get just about any client these days -- except if it's an alleged international con man who's just pretending to be a client. Albert Hu, a Silicon Valley hedge fund manager, was arrested in Hong Kong and on Wednesday was charged by the U.S. Attorney and the Securities and Exchange Commission with duping investors out of millions of dollars. Part of Hu's scheme, authorities claim, was to impress investors by telling them that his funds were represented by prominent law firms. In a private placement memo, for example, Hu allegedly told investors that Pillsbury Winthrop Shaw Pittman was legal counsel to his Fireside LS Fund. In other fund documents, Hu claimed to be using law firms "Heller Ehrman Rose," Proskauer Rose and "Kirkpatrick & Lockhart." Authorities say it was all a ruse -- the law firms had nothing to do with the scheme cooked up by Hu, who allegedly promised big returns and then wouldn't return the money when investors got suspicious. "There would be representations that these law firms were providing legal counsel to the hedge funds," said Elena Ro, an SEC staff attorney on the case. "Those were just a web of lies used to get access to the money." The law firms gave declarations, swearing up and down that they had nothing to do with Hu's alleged fraud -- though they may have represented him on other matters. "Although some of the firms had provided unrelated legal advice to Hu or Asenqua entities, none served as legal counsel to the Asenqua hedge funds as specified in the investment agreements," the SEC said in court papers. "None of these Fireside entities was or is a client of Pillsbury," wrote Pillsbury partner Jay Gould in court papers.

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