Wall Street Fraud Schemes Lead to 4 Arrests

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    NEWSLETTERS

    Four Wall Street fund managers were arrested by the FBI Wednesday for allegedly running three separate fraud schemes. 

    Two owners of a Greenwich investment firm that managed hundreds of millions of dollars for universities and charities were arrested in the latest white-collar scandal to strike Wall Street.

    Paul Greenwood and Stephen Walsh, who ran WG Trading Company LP and of Westridge Capital Management Inc.,  were released on $7 million bond after an appearance in federal court in Manhattan. They faced securities and wire fraud charges alleging they raided funds to cover personal expenses.

    Defense lawyers declined comment.

    Four Arrested in Securities Fraud Schemes

    [NY] Four Arrested in Securities Fraud Schemes
    Four men were arrested for alleged securities fraud in three separate schemes, including two fund managers accused of scamming several universities.

    James Nicholson, of Westgate Capital, and Mark Evan Bloom , of North Hills Fund, were also charged in two separate fraud schemes, according to investigators. Nicholson is accused of a $100 million fraud while Bloom is accused of lying to investors about how their money was invested.  Prosecutors said Bloom invested with one fund in order to collect referral fees for himself.

    Investigators said Greenwood and Walsh stole more than $150 million.  Filings allege the men used the funds for "purchasing rare books, horses, Steiff teddy bears for as much as $80,000, and a $3 million residence for Walsh’s ex-wife."
     

    Greenwood, Walsh and their firm have been the focus of mounting questions as the result of a federal lawsuit filed by Carnegie Mellon and the University of Pittsburgh.

    The two Universities are trying to track more then $100 million in investments now feared missing. Iowa's public employees pension fund is now trying to learn about its $300 million investment with the firm.

    The National Futures Association has suspended Greenwood and partner Walsh after unsuccessful attempts to interview the men about their company. 

    This regulatory organization accuses Greenwood and Walsh of failing to cooperate with investigators, materially hindering their investigation and refusing to disclose what happened to the allegedly missing millions.
     
    A woman who answered a cal to Greenwood’s home refused to comment. Attorney’s for both men did not return calls.

    Greenwood, of North Salem, is a pillar of his Westchester community. He is the town supervisor, the treasurer of the local Episcopal Church and the owner of a nearby farm that raises ponies. His sprawling home is situated on rolling hills behind stonewalls. 

    On Wednesday, he refused to say whether he would resign his post at town supervisor.
     
    Area residents said they were shocked by the allegations.

    "People that have the trappings of all those otherwise virtuous things are not always virtuous," said Lewis Barnes of Lewiboro.

    It's unclear how many other investors had money with the firm.

    Carnegie Mellon said $45 million is unaccounted for. The University of Pittsburgh said it can’t find out what happened to the $65 million it invested.