Westgate president charged with $150m investment fraud

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NEW YORK - James Nicholson, president of Westgate Capital Management, is facing charges over an alleged $150 million fraud at his investment management firm. The alleged fraud has all the hallmarks of a Ponzi scheme and led to investigators freezing Westgate's and Nicholson's assets last month.

He faces four felony charges, including securities fraud and investment adviser fraud, according to a statement by Lev Dassin, acting US attorney for the Southern District of New York.

The allegations date back to 2004 and allege Nicholson made inflated claims to investors of the value of assets under his management, claiming to manage between $600 million and $900 million. Prosecutors said $5 million in cheques made out to the fund's investors bounced in December 2008.

The fund's marketing brochures are also alleged to have disclosed "uniformly positive" returns each month between October 1999 and August 2008 except for September 2001 - echoing the Ponzi scheme fraud allegations made against Texan billionaire Sir Allen Stanford and those already proven against imprisoned fund manager Bernard Madoff.

Prosecutors allege Nicholson's fund performance was much lower during those months and also accuse him of withdrawing $400,000 from a number of Westgate accounts in 50 transactions made at small increments designed to evade the radar of reporting requirements.

Investigators appointed a receiver for Westgate last month in addition to freezing Nicholson's assets and those under management by Westgate.

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• Topics
• Financial crime
• Fraud
• Ponzi scheme
• Regulation