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Connecticut fund manager linked to 'Hamilton' Ponzi case pleads guilty
February 3, 2017 / 9:28 PM / 8 months ago

Connecticut fund manager linked to 'Hamilton' Ponzi case pleads guilty

NEW YORK, Feb 3 (Reuters) - A Connecticut hedge fund manager has pleaded guilty in a case linked to an alleged Ponzi scheme involving the resale of tickets for popular events, including smash Broadway musical “Hamilton.”

Mark Varacchi, founder of Sentinel Growth Fund Management LLC, pleaded guilty in Manhattan federal court on Wednesday to conspiracy, securities fraud and wire fraud charges and is cooperating with authorities, according to court records.

The plea came a day before the U.S. Securities and Exchange Commission filed a civil lawsuit accusing Varacchi, a resident of Norwalk, Connecticut, and Sentinel of stealing $3.95 million from investors.

That lawsuit contains details about Sentinel matching that of a previously-unnamed hedge fund that prosecutors said was operated as a Ponzi scheme with the help of two men, including one, Joseph Meli, implicated in the “Hamilton” case.

Meli, 42, was charged last week in connection with the hedge fund scheme and a related fraud involving a ticket business, which the SEC called an $81 million Ponzi scheme that raised money from investors to buy and resell tickets for hit shows.

Those included “Hamilton,” which won 11 Tony Awards last year, the SEC said.

Meli’s arrest came after prosecutors said the hedge fund’s founder agreed to cooperate with authorities and record conversations with him and Steven Simmons, both of whom they said helped fraudulently solicit investments for the fund.

Varacchi, 47, has agreed to cooperate with authorities, according to his plea agreement. His lawyer, Rodney Villazor, declined to comment.

A lawyer for Simmons, who was head of alternative investments at Sideris Capital Partners, declined to comment. Meli’s lawyer did not respond to requests for comment.

Varacchi pleaded guilty to charges that he misappropriated funds from his hedge fund investors from 2013 to 2016, and used money from other investors to repay them.

He also admitted to having schemed to defraud his prior employer, a New York-based hedge fund, by embezzling money and taking kickbacks from vendors who submitted inflated invoices, court papers said.

In April, Taran Asset Management LLC sued Varacchi, its former chief operations officer, accusing him and a risk management service provider he hired of embezzling $980,000.

That lawsuit was settled in June. In court papers, the SEC said Varacchi misused investor funds to settle a lawsuit by his prior employer. The SEC did not identify Taran by name.

Taran’s lawyer did not respond to requests for comment.

The case is U.S. v. Varacchi, U.S. District Court, Southern District of New York, No. 17-cr-76. (Reporting by Nate Raymond in New York; Editing by Andrew Hay)

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