Parade of investment scammers’ arrests is on, four managers charged by the FBI

As a consistent continuation of the series of fraud scheme investigations that became very urgent and timely in light of the financial crisis which fell upon the whole world, the FBI arrested four top investment managers who were to appear before a federal judge in Manhattan on Wednesday this week. The apprehended persons were charged securities fraud and are facing at least 20 years of imprisonment.

James Nicholson, a head of investment firm Westgate Capital Management, was arrested by Federal Bureau of Investigation agents who incriminated him to securities fraud stemming back to 2004. Paul Greenwood of Greenwich, Conn.-based WG Trading Co. and Stephen Walsh, of Santa Barbara, Calif.-based Westridge Capital Management, were also arrested on a charge of what could be a $550 million financial fraud. Additionally, the FBI also arrested Mark Bloom, a former associate of Greenwood and Walsh, in another separate case.

Nicholson was marketing his business as having $600 million to $900 million in assets and his funds as having returns that were almost always positive, the actual results were much lower. After Madoff scandal the alleged scheme of Nicholson was unveiled as several investors were trying to redeem their funds with the fake checks that were bounced. Nicholson, 42, was charged by the Justice Department with securities fraud and bank fraud.

Greenwood, 61, of North Salem, N.Y., and Walsh, 64, of Sands Point, N.Y., were incriminated to conspiracy, securities fraud and wire fraud. According to the allegations of the FBI agents this couple ran a "fraudulent commodities trading and investment advisory scheme," which secured investor funds by marketing a "conservative trading strategy" that had outperformed the S&P 500 Index for more than a decade. The University of Pittsburgh and Carnegie Mellon University, invested more than $668 million through WG Trading Investors. But their money was used by Greenwood and Walsh for their personal luxuries.

The three perpetrators face maximum sentences of five years, 20 years and 20 years in prison, respectively, along with fines.

Bloom, 57, a W.G. employee, was separately charged by the FBI with defrauding investors in what he marketed as a diversified fund of hedge funds called North Hills Fund from at least July 2001. In this case the funds of investors were also used for personal luxuries of Bloom. He faces a maximum sentence of 20 years in prison, along with fines.