The US Securities and Exchange Commission has charged a self-proclaimed private equity executive with defrauding hedge fund investors for personal gain.
David Bergstein, a former movie producer, allegedly stole millions from investors between 2011 and 2012, and used the money for purchases with a firearms dealer, an antique watch and jewellery retailer, and a bonsai tree nursery, according to the SEC’s complaint.
It alleges the scheme relied on a number of transactions by Weston Capital Asset Management, then a registered investment advisor, with two of its unregistered hedge funds, Weston Capital Partners Master Fund II and the Wimbledon Fund SPC Class TT Segregated Portfolio.
Bergstein is alleged to have misappropriated at least $5.8 million meant for investments in medical billing businesses, across two transactions.
The SEC’s complaint charges Bergstein with violating Section 10(b) of the Securities Exchange Act and Rules 10b-5(a) and (c), and aiding and abetting violations by Weston Capital Asset Management of Section 206 of the Investment Advisers Act of 1940 and Rule 2016(4)-8.
The SEC is seeking injunctions, the return of allegedly ill-gotten gains, and monetary penalties.
The US Attorney’s Office for the Southern District of New York announced parallel criminal charges against Bernstein and Keith Wellner, who was formerly Weston Capital Asset Management’s general counsel, chief compliance officer and chief operating officer.
Wellner has already settled SEC charges filed in the federal district court in Florida and has been barred from working in the securities industry.
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