Berger admitted sending misleading statements to investors between September 1996 and January 2000 when the market turned against him.
He pleaded guilty to one count of securities fraud that carries a possible maximum prison term of 10 years and a $1 million fine. Berger could also be ordered to pay restitution to victims of the scheme.
The Manhattan Investment Fund raised over $575 million from some 300 investors since its launch in September 1996 – by overstating the performance and size of the hedge fund’s holdings, according to prosecutors.
Unfortunately for investors, the fund went “short” against Internet stocks – about two years too soon.
In March a court-appointed receiver for Manhattan Investment Fund Ltd. filed a Chapter 11 bankruptcy petition on behalf of the fund.
In August Berger was accused of receiving accurate account statements each day from his clearing broker, Bear Stearns Cos. but falsified those statements to conceal losses.
He was also charged with sending phony statements to the fund’s administrator, which in turn sent inaccurate statements to the fund’s investors.
Berger is scheduled to be sentenced on March 16.
– Nevin Adams email@example.com