HEDGE FUNDS

[MistySteel]

Westgate Capital Founder Indicted
by Paula Schaap ,Senior Reporter , April 24, 2009

Westgate Capital founder James Nicholson, 42, was indicted Thursday for a hedge fund fraud that prosecutors allege lost investors about $150 million.

The U.S. Attorney for New York charged that, starting in 2004, Nicholson hid losses from his investors. Nicholson’s independent auditor also turned out to be pure fiction, prosecutors charged.

Nicholson plans to plead not guilty to the charges at his arraignment Monday, according to his attorney, Erika McDaniel Edwards.

Since his arrest in February, Nicholson has been in jail, unable to meet the $10 million bail set for his release.

Ironically, it was the biggest fraud of the decade that proved Nicholson’s undoing. After Bernard Madoff’s $65 billion Ponzi scheme was revealed, Westgate investors began trying to pull their money out. Nicholson issued about $5 million in checks but they bounced, the U.S. Attorney claimed.

If convicted, Nicholson faces up to 30 years in prison and a fine of $5 million.

http://www.hedgefund.net/publicnews/default.aspx?story=9990