U.S. accuses NJ hedge fund manager of fraud, lavish spending
By Jonathan Stempel
NEW YORK (Reuters) - A New Jersey man posing as a successful hedge fund manager has been charged with defrauding investors out of $5 million and spending much of it on a million-dollar home, expensive cars, Tiffany jewelry and other luxuries, authorities said.
Nicholas Lattanzio, 58, who operated Black Diamond Capital Appreciation Fund LP, was arrested on Wednesday and charged by the U.S. Department of Justice with three counts of wire fraud and two counts of securities fraud.
The U.S. Securities and Exchange Commission filed related civil charges against the Montclair, New Jersey man, who it said claimed to have invested $800 million and posted 18 percent annualized returns since 2008.
New Jersey's Bureau of Securities separately imposed a $2.5 million civil fine on Lattanzio and a co-defendant, Pasquale Montesanti, who was not charged by federal authorities.
Lattanzio was released on $300,000 bond following a hearing in federal court in Newark, New Jersey. His lawyer Mark Berman declined to comment on the case.
Montesanti could not be reached for comment. It was unclear whether Montesanti has a lawyer.
Lattanzio was accused of inducing a New York oil and gas company and an Atlanta hotel developer to wire about $2 million each as advances while he helped them arrange project financing.
Authorities said Lattanzio instead spent much of those sums, plus about $1 million raised from other investors, on himself, his girlfriend, and his children's private school tuition.
They said this included $1.05 million for the Montclair home, $124,000 at a Land Rover dealership, more than $100,000 at Tiffany, more than $50,000 for New York Yankees tickets, and more than $760,000 to pay off credit card debt.
"Lattanzio masqueraded as a sophisticated hedge fund manager to capitalize on small businesses' legitimate need for financing" and to "bankroll his affluent lifestyle," Andrew Calamari, director of the SEC's New York office, said in a statement.
Lattanzio faces up to 20 years in prison on each fraud count, according to U.S. Attorney Paul Fishman in New Jersey.
Prosecutors are also seeking the forfeiture of the Montclair home, a 2013 BMW 650 sedan, and a ring and bezel set with three diamonds that each weigh more than 1 carat.
The cases are U.S. v. Lattanzio, U.S. District Court, District of New Jersey, No. 15-mag-07140; and SEC v. Lattanzio et al in the same court.
(Editing by Jonathan Oatis)
