Hedge Fund Manager Nabbed in NYC

MANHATTAN (CN) - A British hedge fund manager was arrested Thursday in New York and charged with overvaluing the assets of the Millennium Global Emerging Credit Fund, where he worked, by more than $80 million.

Michael Balboa, 42, "along with his co-conspirators, manipulated the valuation process at his former hedge fund to make it appear financially stronger than it really was and for his own personal gain," the U.S. Attorney's Office said in a statement. "In so doing, he harmed the fund and deceived its investors."

Balboa was the hedge fund's manager from December 2006 until October 2008, when it shut down, prosecutors said. Balboa is charged with conspiracy to commit securities fraud and wire fraud, and one count each of securities fraud and wire fraud. He faces up to a total of 45 years in prison.

The SEC filed a parallel civil case on Thursday, against Balboa and Gilles De Charsonville.

The SEC claims: "Between January and October 2008, the Fund's portfolio manager, Michael Balboa, enlisted two purportedly independent brokers, Gilles De Charsonville and another broker from a U.K.-based broker-dealer firm ('Broker A'), to provide phony mark-to-market quotes for two of the Fund's portfolio securities to the Fund's independent valuation agent, GlobeOp Financial Services, Ltd. ... and outside auditor, Deloitte & Touche (Bermuda), Ltd. ... in order to inflate the Fund's reported monthly returns and overall net asset value. ...

"Balboa and De Charsonville hid their scheme from GlobeOp and Deloitte. At Balboa's direction, De Charsonville and Broker A led GlobeOp and Deloitte to believe that the marks were authentic counter-party quotes. In reality, the marks were dictated by Balboa."

De Charsonville, 49, is a French citizen who lives in Spain.

The SEC seeks penalties, disgorgement and an injunction.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit