Hedge Fund Manager Accused of Bilking Clients for Race Car Hobby
Daniel Avis, 24 April 2021
Hedge fund manager Andrew Franzone was charged with defrauding investors of almost $40 million in part to fund his lavish lifestyle, including buying an aircraft hangar for his private race car collection.
Franzone, 44, was arrested Thursday in Fort Lauderdale on charges of securities and wire fraud, according to federal prosecutors in Manhattan.
From August 2014 to September 2019, Franzone fraudulently convinced more than 100 investors to plow money into one of his funds. He told them he was running a highly liquid portfolio that traded options and preferred stock, according to the U.S. Attorney’s Office for the Southern District of New York.
Instead, Franzone, a racing aficionado, diverted most of the money into high-risk, illiquid private investments. He also lied to investors about the fund’s performance and assets under management and diverted some of the money for his personal use, including the hangar for his cars.
Franzone faces a maximum potential sentence of 20 years in prison.