Investment fund fraud cases continue to be a staple of the SEC and DOJ. The former chairman of Mayfair Capital Group, Stephen Green, was sentenced to 41 months in prison for investment fund fraud. U.S. v. Green, Case No. 1:09-mj-01880 (S.D.N.Y. Filed Dec. 14, 2009).

Mr. Green pleaded guilty in December to two counts of securities fraud. According to the information, over a four year period beginning in 2005, defendant Green made repeated false representations to lure investors into placing their funds in various limited partnership vehicles and asset management companies. Overall, Mr. Green raised from investors over $5.75 million which was diverted to his use.

Typical of the schemes used by Mr. Green to defraud investors is one involving Copal Partners L.P. That firm was represented to be a limited partnership with an ownership interest in a financial services research and analytic services business. According to defendant Green, Copal would go public on the London Stock Exchange by the end of 2006. Mr. Green told an investor that he held warrants in Copal. Those warrants could be converted into Copal shares after the firm went public, according to Mr. Green. To convert the warrants defendant Green claimed he needed $2 million. Mayfair Group was to invest $1 million while Mr. Green would personally put up $250,000. The investor agreed to put $750,000 in Mayfair India, a subsidiary of Mayfair.

Subsequently, Mr. Green told the investor he held a 7% equity interest in Copal. In fact no investment was ever made in Copal.

In sentencing Mr. Green the court also ordered him to pay $5,775,000 in restitution and to forfeit $5,775,000 in proceeds from his offenses. Following his prison term, Mr. Green will be required to serve three years of supervised release.