Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest and unsealing of a complaint charging NICHOLAS JOSEPH GENOVESE with securities and wire fraud in connection with a scheme to induce investments in a hedge fund by misrepresenting his qualifications and professional background. From 2015 through January 2018, GENOVESE fraudulently solicited investments in a hedge fund that he had founded, Willow Creek Investments LP (“Willow Creek”), by claiming that he had impressive credentials and a long history serving in significant roles at major Wall Street financial institutions. Victims invested at least $4 million with GENOVESE based on these representations. The claims that GENOVESE made to help secure these investments, however, were false. GENOVESE did not possess the credentials he claimed and had never worked at the financial institutions he referenced. In addition, GENOVESE failed to inform his investors that he had multiple felony convictions for grand larceny, forgery, and related offenses. GENOVESE was arrested today and will be presented in the Southern District of Florida.
In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against GENOVESE.
U.S. Attorney Berman said: “Nicholas Genovese allegedly touted fictitious credentials when luring victims to invest over $4 million into his hedge fund, Willow Creek, falsely claiming to have an Ivy League MBA and to have held senior roles at Wall Street firms. In reality, as alleged, Genovese had a criminal history and lost millions in stock trades. We thank our law enforcement and regulatory partners for their continued efforts to eliminate fraud from our equity markets.”
Assistant Director-in-Charge Sweeney said: “Through a series of gross misrepresentations, about himself and his supposed credentials, Genovese solicited millions of dollars from victims who invested in the hedge fund he founded. But he was no master of illusion, as proven by the nearly $8 million he lost throughout the course of this smoke-and-mirrors scheme. While this money may have seemingly vanished into thin air, his intentions have been clearly interpreted. Today we hold him accountable for his crime.”
According to the allegations in the Complaint unsealed in Manhattan federal court:[1]
In or about September 2015, GENOVESE began soliciting individuals to invest in the hedge fund that became Willow Creek. In multiple conversations and later in written offering materials, GENOVESE represented, among other things, that he had graduated from the University of Kentucky and Dartmouth College’s Tuck School of Business, and that he had extensive Wall Street experience. In particular, GENOVESE claimed that he had been a Goldman Sachs partner and a Bear Sterns portfolio manager before forming Willow Creek. Based in part on these claims, victims invested at least $4 million with GENOVESE.
These representations were false. Records indicate that GENOVESE did not attend the University of Kentucky or the Tuck School of Business and had never worked for Goldman Sachs or Bear Stearns. GENOVESE also did not tell his investors that he had multiple prior felony convictions.
When investors began to ask for their money back, GENOVESE put them off. He told one investor that he would only return that investor’s funds after “the stars have aligned,” or else there would be a risk that almost all the money would be lost as a result of the purported impracticalities of unwinding unspecified trading positions. Records indicate that GENOVESE lost approximately $8 million trading in TD Ameritrade accounts between January 2015 and December 2017.
GENOVESE, 52, is a resident of New York, New York. GENOVESE is charged with one count of securities fraud and one count of wire fraud. Each charge carries a maximum term of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Berman praised the work of the FBI and thanked the SEC for its assistance.
The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.
