Owner of NJ Hedge Fund Sentenced for Wire, Securities Fraud After Defrauding Investors of $4M
The owner and manager of a New Jersey hedge fund was sentenced today to 72 months in prison for defrauding two investors of $4 million, U.S. Attorney Craig Carpenito announced.
According to authorities, Nicholas Lattanzio, 62, of Montclair, was previously convicted on all counts of an indictment charging him with two counts of wire fraud and two counts of securities fraud following a three-week trial before U.S. District Judge Kevin McNulty, who imposed the sentence today in Newark federal court.
According to documents filed in this case and the evidence at trial:
From June 2013 through November 2014, Lattanzio orchestrated a large-scale scheme through which he, his hedge fund, the Black Diamond Capital Appreciation Fund L.P. (BD Fund), and several other related entities collected millions of dollars in upfront fees from two unsuspecting corporate investors in exchange for the promise of future loans or investment opportunities that did not materialize.
Instead of investing the victims’ money as promised, Lattanzio stole the majority of the funds and used them to pay himself more than $500,000 in salary. He used the money for numerous personal expenses, including the purchase of a $1 million home in Montclair, a new Range Rover, a $10,000 diamond ring, and the payment of $500,000 in credit card debt that he incurred for other personal expenses.
Officials say Lattanzio lied to the victims about the status of their funds to conceal the scheme and mislead them into believing that their investments were safe.
In addition to the prison term, Judge McNulty sentenced Lattanzio to three years of supervised release and ordered him to pay restitution of $3.93 million.