CHICAGO (CN) – A hedge fund manager walked in to a U.S. Attorney’s Office and confessed to defrauding 48 investors of more than $3.5 million, an FBI agent says. James Brandolino of Joliet admitted he lost half of his clients’ money in bad trades and spent the rest of it on a BMW, a Rolex and a condominium in Greece, among other things, according to the FBI agent’s affidavit.
“Brandolino has held NFA [National Futures Association] registrations in various capacities in the commodities brokerage business, including as an ‘Associated Person,’ a ‘Floor Broker’ and a ‘Principal,’ from May 1997 until January 2011, with exchange floor trading privileges at the Chicago Board of Trade, which is now part of the CME Group,” according to the FBI agent’s 7-page affidavit.
Agent Brent Potter adds that “Brandolino has also been a principal of several commodities trading businesses, including of Brandolino Investment Group (‘BIG’), Lloyd Lewis Capital Inc., Falcon Trading Group Incorporated and Falcon Capital Partners LLC.”
Brandolino walked in to the U.S. Attorney’s Office with his lawyer this month and confessed to orchestrating a fraudulent investment scheme that began in 2003, according to the affidavit.
Brandolino said he raised $4.7 million from investors “for purported managed futures trading accounts and for a commodity pool investment,” the affidavit states.
It continues: “Brandolino raised these funds from approximately 48 individuals, who were generally high net worth investors. Brandolino told investors in the managed accounts and in the commodity pool that their funds, with the exception of a commission, would be used to trade futures contracts, primarily CME Group Dow Jones Industrial Average and S&P 500 Equity Index contracts.”
Brandolino admitted that he falsified financial statements to show investors that his trades were profitable when they were not, the affidavit states. It states that as recently as October 2010, he “represented in periodic account statements that their total equity on deposit with Brandolino was approximately $7.5 million.”
Brandolino said he paid out around $1.1 million in “investor redemptions,” and “admitted to losing roughly half of the total invested funds since 2003 through trading and misappropriating most of the remaining funds for his own personal benefit,” the affidavit states.
It says that “Brandolino indicated that almost all of the misappropriated funds have been spent, and his assets are limited to a 2003 or 2004 BMW745, a Rolex watch for which he paid approximately $6,000, and an interest in an unbuilt condominium in Greece on which he put down 80,000 Euros.”
Brandolino, 42, is in federal custody and has been charged with mail fraud, according to press reports. If convicted, he faces up 20 years in prison and a $250,000 fine, with mandatory restitution.