The SEC says Lauer hatched a “devious plot” to fool investors into thinking he had produced big gains so that he could pocket tens of millions of dollars in performance fees. It alleges he goosed the thinly traded shares of “virtually worthless” companies by buying tiny amounts at large premiums to their current prices–then assigned those oddball values to vast stakes bought earlier at a fraction of the cost. It says Lauer even once claimed profits on stocks he did not own.
All this adds up to what may prove to be one of the biggest fund frauds ever: Portfolios that drew $613 million from investors, net of redemptions, and were once valued by Lauer at $1.2 billion, shriveled to $70 million, if a filing last month with a Fort Lauderdale, Florida, district court holds true. That means $543 million in cash has vaporized.
“You have worthless companies valued at hundreds of millions of dollars,” says Christopher Martin, an SEC lawyer. “It’s black and white.”
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