Hedge Fund Fraudster Owes SEC $8 Million

(CN) - A convicted securities fraudster and the hedge funds he managed owe the Securities and Exchange Commission nearly $8 million, a federal judge ruled.

In a March 2009 complaint, the SEC accused Albert Hu and his entities - Asenqua, Asenqua Capital Management, AQC Asset Management and Fireside Capital Management - of violating the Securities Act of 1944, the Securities Exchange Act of 1934 and the Investment Advisors Act of 1940.

It said Hu had raised more than $5 million from investors with connections to Silicon Valley by falsely claiming that experienced attorneys, auditors and others were handling the Asenqua and Fireside funds.

Hu also identified a fictitious chief financial officer of Asenqua and forged that "individual's" signature in communications with investors, according to the complaint.

"From approximately 2001 through the present, defendant Albert K. Hu has been defrauding investors in his hedge funds by falsifying investment documents, quarterly account statements, and other financial statements, and by misappropriating their investment funds," the complaint stated. "The false documents Hu provided were designed to give an aura of authenticity to Hu's hedge funds and to induce investors into believing that credible and reliable 'gatekeepers' safeguarded their investments."

There were no such "gatekeepers," however, and Hu instead transferred hundreds of thousands of dollars in investor funds into foreign bank accounts, the SEC said.

"In reality, Hu paid for a virtual office with an address in the San Francisco financial district for the 'independent' audit firm," the SEC stated in a statement.

Hu, now 51, has since been convicted in a criminal case based on the same relevant facts.

The U.S. District Court in San Jose, Calif., court entered default judgment in the civil case against the hedge funds on March 1, 2013. Hu failed to respond to the motion or appear at the hearing, the court noted.

U.S. District Judge Ronald Whyte awarded the SEC final judgment Friday.

The order permanently enjoins all defendants from any future violations and compels them to collectively pay $6.6 million in disgorgement and prejudgment interest. They also owe the SEC a $1.3 million civil penalty.

Hu, who was arrested in Hong Kong on March 18, 2009, has 14 days to comply with the order.

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