Michael J. Spak, 44, Chesterfield, NJ, had this idea - some might call it a game-plan - to get prospective investors to put their hard-earned bucks into the Osiris Fund Limited Partnership.
What's the Osiris Fund? For one thing, it appears to have been named after the ancient Egyptian god of the dead, often depicted as holding a crook and flail in his crossed arms.
Come to think of it, not a bad choice of names or images. For one thing, the investment would prove more dead than alive and, for another thing, there seems to have been more than one crook at work here and far too many folks flailing about with the truth.
In any event, if you fell under the spell of the Osiris Fund Limited Partnership and its soothsayers, you were told that it was a hedge fund management company. Yeah, sure - hedge funds need management companies named after the God of the Dead. Uh huh. Works for me. You?
Now there was a cutesy angle to the pitch of Mr. Spak and his pals, they would tell you that the Osiris Fund was a deal for the "little guys" and "moms and pops." Isn't that nice and egalitarian of them to let the small fry into such a high-flyin' hedgie deal?
By the way, Spak is no relation to the similar sounding Star Trek Spock. That Spock was born in 2230, in the city of Shi'Kahr on the planet Vulcan. Spak, on the other hand, was Chief Executive Officer, managing member, and senior partner of Osiris Partners, LLC.
Could this Spak fight off the Romulans? I don't think so. He would probably need, at the very least, a sophisticated hedge fund cloaking device and word has it that only Goldman Sachs or JP Morgan has one in inventory - there were rumors about such a black-box development at Morgan Stanley but that seems to have been someone talking their book. Then there is the persistent urban myth that MF Global had a cloaking device that misfired and destroyed the firm. Of course, we all know about that E*Trade baby's amazing abilities, maybe there's something there too?
In any event, Osiris Partners was a general partner and the investment manager of a purported hedge fund known as the Osiris Fund Limited Partnership, which also was headquartered in Jersey City, New Jersey.
The hard sell here was that Osiris Fund would concentrate its trading activities in highly liquid, large capitalization stocks and limit individual positions in the Fund's portfolio to no more than 30% of the portfolio's value. And all that for a capped 3% management fee. How the hell could anyone pass up such an opportunity?
And so, after starting in 2009, 75 pigeons later and some $12 million in invested funds down the drain, the Osiris Fund was in full bloom. It was a short-lived season. By January 2010, Spak and his co-conspirators started to divert funds from the purported management of hedge funds to personal uses - for example, $300,000 towards the purchase of the luxury sport-fishing boat "Fintastic." If you bothered to audit the books, you would have seen that the fishing boat purchase was structured as a "loan" from the fund to the partnership. How nice!
By 2011, the conspiracy had diverted $4 million. Not only did a chunk of change simply get stolen for personal uses, but in April and May 2010, the Osiris Fund incurred a whopping $4.5 million in trading losses, about half the fund's value.
Of course, as these scams go, the defrauded investors were kept ignorant through bogus financial statements that proudly depicted the diverted funds as on-the-books assets. For good measure, this nearly $5 million fabricated asset came along with a 3% management fee charged by Spak and his cronies to the investors!
Alas, the old gods did not smile kindly upon Spak and his buddies. On September 26, 2012, Spak pleaded guilty in federal court in the District of New Jersey to an Information charging him with conspiracy to commit wire fraud, punishable by a maximum potential penalty of 20 years in jail and a $250,00 fine. Sentencing is scheduled for January 9, 2013.
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