States Attorney's Office District of Connecticut
|January 6, 2010||
FORMER STAMFORD HEDGE FUND MANAGER PLEADS GUILTY
Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that FRANCESCO RUSCIANO, 28, of Stamford, waived his right to indictment and pleaded guilty today before Senior United States District Judge Ellen Bree Burns in New Haven to one count of wire fraud.
According to court documents and statements made in court, from approximately March 2007 to April 2009, RUSCIANO operated a private investment fund, the Ponta Negra Fund I, LLC at his residence in Stamford. In approximately January 2009, RUSCIANO started the Ponta Negra Offshore Fund, LTD. The Funds represented that the monies invested in them would be used for trading of spot, forwards, non-deliverable forwards and options in G7 and emerging market economies. In pleading guilty, RUSCIANO admitted that he defrauded investors by overstating his background and experience as a currency trader with his prior employer and by overstating his performance history. At times, RUSCIANO also overstated the amount of funds he had under management in Ponta Negra Funds.
In marketing materials he provided to potential investors prior to March 2008, RUSCIANO represented that he had previously managed an investment portfolio of more than $1 billion. In fact, RUSCIANO had worked for three years at UBS, for a portion of the time in a training program, and only traded his own book during his last five months at the firm with a markedly smaller portfolio. In the same marketing materials, RUSCIANO falsely represented that he had succeeded in quadrupling the profits of the emerging markets desk from 2004-2006, and that his historical trading performance from 2003-2006 markedly beat the S&P 500, when he only had his own trading book at UBS starting in 2006. RUSCIANO also represented to investors and potential investors that other investors had entrusted him with in excess of $50 million to invest on their behalf when, in truth, those other investors had invested about half that amount.
As a result of these various misrepresentations, RUSCIANO’s investors placed approximately $24 million in principal with the Funds during their time of operation and, in turn, investors redeemed approximately $9 million before his scheme was discovered. At the time the Securities and Exchange Commission froze the assets of the Funds in April 2009, approximately $15 million remained in the Funds.
“I want to credit the work of the FBI and SEC, whose quick actions were able to protect much of the money that this defendant fraudulently obtained,” stated U.S. Attorney Dannehy.
Judge Burns has scheduled sentencing for April 2, 2010, at which time RUSCIANO faces a maximum term of imprisonment of 20 years.
The FBI arrested RUSCIANO at his residence on May 1, 2009. He has been released on bond under electronic monitoring since May 4.
This case has been investigated by the Federal Bureau of Investigation with the assistance of the Securities and Exchange Commission and U.S. Immigration and Customs Enforcement. The case is being prosecuted by Senior Litigation Counsel Christopher W. Schmeisser and Assistant United States Attorney Michael S. McGarry.
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