Monday, May 5, 2008
The SEC filed an emergency action to halt an ongoing $30 million hedge fund fraud by an investment adviser located in San Diego. Named in the complaint are Plus Money, Inc. ("Plus Money") and Matthew La Madrid ("La Madrid"). The United States District Court for the Southern District of California issued an order on April 30 temporarily freezing the assets of the defendants and the relief defendants.
The Commission's complaint alleges that since at least May 2004, the defendants have managed hedge funds (the "Premium Return Funds") that raised more than $30 million from over 300 investors by telling them they would engage in a covered call options trading strategy. The complaint further alleges that, unbeknownst to investors, in the fall 2007 Plus Money and La Madrid abandoned the covered call trading strategy, emptied out the monies in the Premium Return Funds' brokerage accounts, and dissipated the money through a series of illicit transfers.