Former Hedge Fund Principal Sentenced in Manhattan Federal Court to Two Years in Prison for Stealing More Than $2 Million in Investor Funds
Preet Bharara, the United States Attorney for the Southern District of New York, announced that BERTON HOCHFELD, the former Manager of Hochfeld Capital Management, L.L.C. (Hochfeld Capital), was sentenced in Manhattan federal court to two years in prison in connection with an investment scheme in which he stole more than $2 million from investors. HOCHFELD pled guilty in January 2013 to one count of securities fraud and one count of wire fraud before U.S. District Judge Paul A. Crotty, who also imposed sentence.
Manhattan U.S. Attorney Preet Bharara said: “Berton Hochfeld scammed investors who trusted him out of more than $2 million and spent it in part on luxury items for himself. This office will not tolerate those who seek to bilk their investors.”
According to the charging instruments in this case and statements made in open court and at the plea proceeding:
HOCHFELD was the manager and organizer of Hochfeld Capital, a limited liability company incorporated in Delaware that, at various times, maintained an office in New York, New York. Hochfeld Capital, in turn, served as the General Partner of the Heppelwhite Fund, L.P. (the Heppelwhite Fund), a hedge fund that was formed to invest in publicly traded securities, mainly in the technology sector. In connection with the management of the Heppelwhite Fund, HOCHFELD made false representations to investors regarding their investments, and misappropriated their money.
For example, by December 2010, HOCHFELD was aware that Hochfeld Capital’s internal accounting for the Heppelwhite Fund reflected an inflated net asset value (NAV), as compared to the value reflected in the books of the prime broker where the fund’s assets were actually located. Despite his knowledge of the disparity, HOCHFELD caused monthly statements to be sent to Heppelwhite Fund investors that reflected the inflated NAV calculated by internal accounting records.
From April 2011 through October 2012, HOCHFELD also withdrew money from the Heppelwhite Fund for his own personal use, ultimately misappropriating more than $2 million. During this period, at HOCHFELD’s direction, monthly account statements were provided to Heppelwhite Fund investors that falsely represented the fund’s value by failing to account for the money that he had withdrawn. At a meeting in October 2012, HOCHFELD admitted to certain investors that he had taken more than $1 million from the Heppelwhite Fund, and that he spent portions of that money on antiques and vacations.
In addition to his prison term, HOCHFELD, 66, of Stamford, Connecticut, was sentenced to three years of supervised release. He was also ordered to forfeit $2,110,535.84.
Source: U.S. Attorney’s Office
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