Court Orders Hedge Funds to Return $230 Million Held in Offshore Accounts to The U.S.

Source- http://www.sec.gov/litigation/litreleases/2011/lr22015.htm

The Securities and Exchange Commission today announced that pursuant to a Court order, $230 million has been returned to the United States from overseas and will remain frozen until completion of the SEC's case against Connecticut based registered investment adviser Highview Point Partners, LLC and its principal Francisco Illarramendi.

The SEC charged Illarramendi and Highview with engaging in a multi-year Ponzi scheme involving hundreds of millions of dollars. Highview was added as a defendant on May 10, 2011 to a case the SEC previously filed in January 2011 against Illarramendi and his unregistered investment advisory firm MK Capital Management, LLC. The SEC also named three hedge funds managed by Highview and several entities affiliated with MK Capital Management as relief defendants because, according to the SEC’s charges, they are in possession of funds tainted by the Ponzi scheme. After an evidentiary hearing, the Honorable Janet Bond Arterton, U.S. District Judge for the District of Connecticut, entered an order on June 16, 2011 freezing the assets of three hedge funds advised by Highview, and ordered that all assets of the hedge funds, including $230 million held in offshore accounts, be immediately repatriated to the United States. Judge Arterton also ordered, with the consent of Highview, that Highview be placed under the control of John J. Carney of Baker Hostetler LLP, who was previously appointed as receiver in the case. Judge Arterton had previously frozen the assets of Illarramendi, Highview, MK Capital Management and several affiliated entities.

The SEC’s second amended complaint charges Illarramendi, Highview, and Michael Kenwood Capital Management with violating Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and also charges Highview with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also names the following entities as relief defendants, alleging that they received investor funds to which they have no right: Highview Point Master Fund, Ltd., Highview Point Offshore, Ltd., and Highview Point LP, Michael Kenwood Asset Management LLC, Michael Kenwood Energy and Infrastructure LLC, and MKEI Solar LP. In addition to preliminary emergency relief, the SEC’s complaint seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest and penalties from the defendants, and disgorgement plus prejudgment interest from the relief defendants.

The SEC’s investigation is continuing. The SEC acknowledges and appreciates the assistance of the U.S. Attorney’s Office for the District of Connecticut and the Federal Bureau of Investigation.

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