Two money managers who oversaw investments for Carnegie-Mellon University and other institutions were arrested Wednesday on charges of running an estimated $550 million, decade-long swindle, the latest in a wave of big financial fraud cases.
Paul Greenwood, 61, and Stephen Walsh, 64, managing general partners of WG Trading Co with main offices in Greenwich, Connecticut, were charged by federal prosecutors with conspiracy, securities fraud and wire fraud.
The two, both former part-owners of the New York Islanders National Hockey League team, are accused of using client money as "their personal piggy-bank" to fund lavish lifestyles, according to the U.S. Securities and Exchange Commission.
The SEC and Commodity Futures Trading Commission brought civil charges against the men, WG Trading and an affiliated firm, investment adviser Westridge Capital Management Inc of Santa Barbara, California.
The charges, filed in U.S. District Court in Manhattan, come amid a wave of fraud cases involving money managers.
The biggest case involves former Nasdaq chairman Bernard Madoff, arrested in December and charged with fraud after authorities said he confessed to running a Ponzi scheme with losses of up to $50 billion over many years.
Greenwood and Walsh were arrested by the FBI Wednesday morning, two weeks after their suspension by the National Futures Association for not complying with an audit.
Attorneys for the two men were not immediately available. A woman who answered the phone at a WG Trading office in North Hills, New York, declined to comment.