A former hedge fund manager pleaded guilty on Friday to defrauding investors in a $12.6 million scheme, more than five years after the fund collapsed under the weight of failed real estate loans.
Lloyd Barriger, who operated Gaffken & Barriger, a Monticello, New York-based investment fund, pleaded guilty in White Plains federal court to charges of securities fraud, mail fraud and conspiracy, the U.S. Attorney's Office said in a statement.
Federal prosecutors accused Barriger of bilking more than 70 investors from July 2006 to March 2008 by soliciting millions of dollars for a fund he falsely presented as a safe and liquid investment. He continued to promise investors an 8 percent return, even as the fund defaulted on a $20 million line of credit and held an increasingly delinquent portfolio, according to an indictment filed in February.
"Once again, belief in hedge funds by hopeful investors proved to be sadly misplaced," Manhattan U.S. Attorney Preet Bharara said in a statement. "In this case, the perpetrator was not in a sleek Manhattan building but rather in Sullivan County."
Barriger's lawyer, federal defender Mark Gombiner, did not immediately respond to an email seeking comment.
Barriger, 57, of Damascus, Pennsylvania, faces a maximum sentence of 65 years in prison. U.S. District Judge Cathy Seibel, who is overseeing the case, scheduled a sentencing hearing for November 15.
In addition to a prison term, federal prosecutors will seek at least $12.6 million in forfeited assets, representing the proceeds of the charged crimes, the indictment said.
The case is USA v. Barriger, U.S. District Court for the Southern District of New York, No. 11-416.
(Reporting By Terry Baynes in New York; Editing by Bill Trott)