investigators | business fraud | criminal defenseDue diligence pays for Nardizzi client
Feb.27.2017
In the wake of repeated news of SEC investigations of hedge fund and investment management firms, an investment bank credited an early-stage due diligence report by investigative firm Nardizzi & Assoc. for saving clients from multi-million dollar fraud losses.
The Securities and Exchange Commission charged a Pearl River, N.Y., investment management firm Westgate Capital Management, LLC and its managing member, James M. Nicholson with operating a large-scale scheme that defrauded hundreds of investors of millions of dollars. The SEC alleges that Westgate solicited investors with false claims of an almost unbroken eight-year string of monthly investment successes.
In the fall of 2007, a New York investment bank had retained Nardizzi & Assoc. to investigate links between Nicholson, Westgate, and other individuals. The report issued by Nardizzi swayed the investment bank away from investing with Nicholson.
The arrest of Nicholson made waves in tony Palm Beach as well, as reported in the Palm Beach Daily News:
“The vigilance of Madoff-wary investors has helped bring about the arrest of another part-time Palm Beach resident, the manager of an unregistered hedge fund accused of swindling an estimated $900 million from clients since 2004.
The FBI on Wednesday arrested James M. Nicholson, 42, owner of a penthouse in the Dunster House condominium complex, on charges of securities fraud and bank fraud. Also on Wednesday, the Securities and Exchange Commission filed a federal complaint against Nicholson and his company, Westgate Capital Management LLC of Pearl River, N.Y., seeking relief for the fraud and an injunction to stop it.
A telephone call to Nicholson's primary residence in Saddle River, N.J., was not returned by press time. A telephone line listed for Nicholson's multi-million dollar Dunster House penthouse was disconnected.”
The investigation into Nicholson began when Westgate investors reacted to alleged Ponzi mastermind Bernard Madoff's $50 billion scheme. When they began to redeem their own investments in different Westgate hedge funds, nearly $5 million in checks bounced.
The SEC released this statement regarding Westgate Capital Management, LLC and its managing member, James M. Nicholson, who was arrested by the FBI at his New Jersey home.