$300 Million Goes Missing; Adviser Gone Too

CINCINNATI (CN) - An investment fund manager disappeared with $300 million in one of the biggest frauds ever pulled in Cincinnati, seven investors claim in a class action.

Lead plaintiff Mike Willner sued Glen Galemmo, Galemmo Investment Group, Queen City Investment Fund, several other Queen City entities, and others, in Hamilton County Court of Common Pleas.

Cincinnati, the seat of Hamilton County, is known as the Queen City.

The investors claim that Galemmo has disappeared, and so has their money, much of it taken from their retirement accounts.

"This class action is brought on behalf of approximately 200 persons who were unlawfully induced to invest their pension plans, IRAs, retirement accounts and other monies in one of the largest financial frauds in the history of Hamilton County, Ohio," the lawsuit states. "Defendants, in violation of the laws of the State of Ohio and the laws of the United States, developed and then carried out a scheme intended to look like a simple investment in stocks, bonds and other types of securities. Unbeknownst to class members, defendants, in actual fact, had designed and executed a hidden and disguised program of reckless financial transactions. The principal intent of the scheme was not 'capital appreciation' as the investors were led to believe; rather, defendants created a 'cookie jar' with investors' money that defendants treated as their own, withdrawing whatever they personally needed without detection or challenge.

"No accurate account of the use or whereabouts of over $300,000,000 of proceeds from defendants' sale of membership interests in Fund II, or other investments made with or through defendants, is known to presently exist, was ever reported to the investors, to the SEC, or to the State of Ohio. No accurate account of the amount of an individual's investment status is known to exist, and misleading information has been provided to investors, which purports to provide the true value of their investments. ...

"Galemmo claims to have sold over $300,000,000 of membership interests in Fund II since approximately 2002. On July 17, 2013, at 7:31 am, plaintiffs, and other members of the class, without any prior warning, received a shocking email from Galemmo announcing that as of July 17, 2013, 'Queen City Investments will no longer be in operation.' Galemmo further advised that he had been instructed by counsel not to speak or interact with any 'clients' and directed the recipients of his email to a special agent with the Internal Revenue Service.

"It is now apparent that defendants lied to investors and regulatory agencies about, among other things: (i) Fund II's investment strategies; (ii) Fund Il's investment performance; (iii) Fund II's size and value; (iv) the value of each individual non-managing member's interest in Fund II; and (v) where and how investor monies were invested or held. Defendants violated both state and federal laws designed to protect investors from the very conduct engaged in by defendants. Plaintiffs and class members now face serious jeopardy of losing most or all of their retirement funds, college funds and other savings entrusted to defendants. The Fund II is shut down; Galemmo has disappeared; the defendants' offices have gone dark; and, investor money remains unaccounted for. This case seeks to right those wrongs.

"On Sunday July 21, 2013, more than 100 individual investors met in Cincinnati, Ohio to form a Steering Committee to investigate and pursue claims against all culpable persons and entities that are responsible for investors' losses. Members of the Steering Committee and others are named plaintiffs in this action."

The investors seek compensatory and punitive damages for securities violations, fraud, conversion and unjust enrichment.

They are represented by James Cummins with Cummins and Brown.

Here are the defendants: Glen Galemmo; Queen City Investment Fund II LLC; Queen City Advisors LLC; Galemmo Investment Group; Queen City Investment Funds; Queen City Investments; Queen City Hedge Fund; QC Power Strategies Fund II LLC; QC Power Strategies Fund Sweep Account LLC; QC Power Strategies Fund LLC; Sentinel Property Holdings LLC; Glen Rock LLC; Sentinel Strategy Fund LLC; QFC LLC; Midwest Hoops at Sportsplus LLC: Midwest Hoops Sports Complex LLC; Cincinnati Royals Inc.

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