Broker Investigation: Nicholas Genovese

On February 2nd, 2018, the Securities and Exchange Commission (SEC) announced that it was filing fraud charges against purported hedge fund manager Nicholas J. Genovese. Over the last several years, Mr. Genovese was the individual in charge of the New York-based hedge fund Willow Creek Investments LP.

In this article, our experienced hedge fund fraud attorneys highlight key details in the government’s case against Nicholas J. Genovese. All information contained below comes directly from the official legal complaint that was filed by the SEC in the United States District Court for the Southern District of New York. For additional information on the case or on the legal charges against Mr. Genovese, please refer to the SEC’s legal complaint.

Hedge Fund Fraud Charges: Nicholas Genovese

SEC Action

The SEC has taken emergency action in order to halt a securities fraud scheme that is allegedly being committed by Nicholas Genovese. The agency believes that this fraud is being conducted through Mr. Genovese’s company, Willow Creek Investments, LP. In the words of the agency, Mr. Genovese is a “financial con artist” who has committed major securities fraud by “lying about his resume and concealing his criminal past.”

False Statements

In carrying out the investment fraud, the SEC alleges that Mr. Genovese has raised more than $5.3 million from at least six different investors. In obtaining these investments, Mr. Genovese has made a wide range of materially false statements to investors, including:

• Lying about attending Dartmouth Business School;
• Lying about being a partner at Goldman Sachs;
• Inflating Willow Creek’s total assets from $10 million to $39 billion;
• Falsely stating that Willow creek averages returns of 30 to 40 percent annually.

In addition to the false statements, Mr. Genovese omitted material information in soliciting money from investors. He failed to disclose his criminal record and his history of personal bankruptcy filings.

Misappropriation of Funds

The SEC repeatedly refers to Nicholas J. Genovese as a “purported hedge fund manager”. The reason for this is that Mr. Genovese’s hedge fund, Willow Creek, does not appear to even have a brokerage account at all. Instead, all of the investor money that was collected by Mr. Genovese was funneled into his personal trading account.

According to the SEC, Mr. Genovese has sustained trading losses in this account of more than $8 million over the last three years. Beyond the trading losses, the agency believes that Mr. Genovese had siphoned off investor money.

In many ways, his hedge fund fraud shares characteristics with a Ponzi scheme. As is inevitable for Ponzi schemes, this one has crashed. On January 26th, 2018, an investor informed that SEC that Mr. Genovese refused his long-standing redemption request. Along with the civil charges, parallel criminal charges have been filed by the United States Attorney’s Office.

We Represent Investors Nationwide

At Sonn Law Group, our top-rated investment fraud attorneys have helped many victims recover full and fair compensation for their illegitimate investment losses. If you or a family member was the victim of investment fraud or broker negligence, please contact us today for a free initial consultation.

Disclaimer: This article contains opinions and NOT statements of fact in any way whatsoever. The information here is general information that should not be taken as legal advice. NO attorney-client relationship is established between you and our attorneys by reading this article. This article is attorney advertising and should not be used as a substitute for legal advice from a qualified securities lawyer.