Silicon Valley Hedge Fund Fraud – Asquena Albert Hu’s Sentenced to 12 years in Prison

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Originally posted at the hedge fund operational due diligence blog www.Corgentum.com/blog an overview of hedge fund fraud Albert Hu

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Silicon Valley Hedge Fund Fraud – Asquena Albert Hu’s Sentenced to 12 years in Prison

  1. 1. Silicon Valley Hedge Fund Fraud – Asquena AlbertHu’s Sentenced to 12 years in PrisonThings seemed to be going well for Silicon Valley hedge fund manager Albert Hu for quite some time.Beginning around 2001 his at least half a dozen hedge funds were supposedly performing well andsuccessfully raising capital from investors. Things continued along smoothly for several years.Performance was supposedly consistently good and investors kept allocating his hedge funds capital.Investors with Mr. Hu’s funds thought they had nothing to worry about. That was until 2009. In March of2009 Mr. Hu, who reportedly claimed to have a PhD from MIT, was charged with fraud by the SEC. TheSEC raised a number of concerning question about the operations of “Dr.” Hu’s hedge funds includingAsquena Capital Management, AQC Asset Management and Fireside Capital Management. Among theSEC’s charges were that Hu:1) Lied about his service providers – Hu claimed to investors that several “prominent international lawfirms” served as legal counsel to the funds.2) Lied about auditor independence – Hu claimed that his funds were audited by “independent” auditors.The problem was that he paid for the auditors virtual office space. The SEC didn’t feel that thisrelationship was very independent at all.3) Claimed people worked for his firm who didn’t – Hu claimed he had a Chief Financial Officer workingfor his firm. The problem was the person that he claimed worked for his firm didn’t actually work for him.Taking things up a notch, Hu went even as far as to forge this individuals signature on investorstatements.4) Used investor money for personal use or other unrelated business entities – Hu transferred money thatinvestors had given him to invest in his hedge funds to personal business ventures including an unrelatedventure in Taipei. The SEC alleged he made over 50 different such transfers of cash out of his hedgefunds.5) Lied about fund performance – Hu greatly exaggerated the performance of his hedge funds6) Mysteriously relocated his hedge funds from California to Singapore – In 2005 Hu told investors thatdue to “burdensome tax regulations as well as ‘privacy concerns’ ” he was moving the hedge funds (andinvestors money) outside of the US.7) Further lies about service provider relationships – After moving the funds to Singapore Hu thenclaimed he had a new “independent” auditor and fund administrator. This was also a lie.In January 2009 Hu, who was now hiding in Hong Kong, had stopped returning investors calls and emails.In March 2009 the SEC showed up and filed this complaint. In January 2013 Hu was convicted ofcheating investors out of at least $6.5 million and was sentenced to 12 years in prison.Originally posted on the Corgentum Consulting blog at www.Corgentum.com/blog
  2. 2. About Corgentum ConsultingCorgentum Consulting is a specialist consulting firm which performs operational due diligence reviews offund managers. We work with investors including fund of funds, pensions, endowments, banks and familyoffices to conduct the industrys most comprehensive operational due diligence reviews. Our work coversall fund managers and strategies globally including hedge funds, private equity, real estate funds andtraditional funds. Our sole focus on operational due diligence, veteran experience, innovative originalresearch and fundamental bottom up approach to due diligence allows us to ensure that our clients avoidunnecessary operational risks. More information is available at www.Corgentum.com or follow us onTwitter @Corgentum.For More Corgentum.comInformation info@corgentum.com Tel. 201-360-2430© 2013 Corgentum Consulting, LLC

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