In one of the most recently uncovered Ponzi cases, a former hedge-fund manager has pleaded guilty to criminal charges in an investment scam in which he bilked as much as $900-million from investors, including four university endowments. According to investigators, the Paul R. Greenwood and his partner Stephen Walsh spent at least $160-million on mansions, horses, rare books, and an $80,000 collectible teddy bear. Mr. Walsh has pleaded not guilty, and Mr. Greenwood will testify against him at trial.
Questions:
1. What did the investors find out about their assets? Explain why this was a bad sign.
2. What do the articles say could have prevented the university investments in this scheme?
3. What potential penalties does Mr. Greenwood face?
Sources:
Fain, Paul. (2010). Hedge-Fund Manager Pleads Guilty to Multimillion-Dollar Swindle of Four Universities. The Chronicle of Higher Education, July 29 (Retrievable online at http://chronicle.com/article/Hedge-Fund-Manager-Pleads/123713/?sid=at&utm_source=at&utm_medium=en)
Fain, Paul. (2009). Two Universities Seek Answers After $114-Million Vanishes in an Alleged Swindle. The Chronicle of Higher Education, March 5 (Retrievable online at http://onnidan1.com/forum/index.php?topic=24965.0)