NEW YORK (CN) - Former hedge fund manager James Nicholson pleaded guilty Friday to running a Ponzi scheme that prosecutors say netted about $133 million from investors. The former president of Westgate Capital Management pleaded guilty to three felony charges, including securities fraud, investment adviser fraud and mail fraud before a Manhattan judge.
Prosecutors say Nicholson falsely represented to investors that Westgate's funds had assets between $600 and $900 million. "The true value of its assets was materially less," prosecutors said in a statement.
Brochures for a Strategic Growth Fund also claimed positive returns for each month from January 2004 through August 208, while another brochure for a similar fund showed "uniformly positive returns" from October 1999 through December 2007, prosecutors said.
"In truth... performance of the fund was materially lower than represented," prosecutors said.
They say the scheme began in 2004, but crumbled last December when investors sought to redeem their investments after Bernie Madoff was arrested and convicted of running a billion-dollar Ponzi scheme.
Prosecutors say $5 million worth of checks to investors bounced.
Nicholson, 43, faces a combined maximum of 45 years in prison when he is sentenced on April 30.
"James Nicholson swindled his victims out of $133 million by making false assurances and claiming false profits," U.S. Attorney Preet Bharara said. "Today's guilty plea is another important step in our ongoing effort to bring justice to victims of Ponzi schemes."
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.