Fairfield County Hedge Fund Executives Plead Guilty To Federal Conspiracy Offense
The United States Attorney for the District of Connecticut, the New Haven Division of the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General, today announced that DAVID BRYSON, 45, of Ridgefield, BART GUTEKUNST, 62, of Weston, and RICHARD PEREIRA, 42, of Ridgefield, all former executives of New Stream Capital, LLC (“New Stream”), a Ridgefield-based hedge fund, pleaded guilty yesterday in New Haven federal court to a federal conspiracy charge stemming from a scheme to deceive investors in order to obtain and maintain investments. BRYSON and GUTEKUNST were managing partners and principals at New Stream and PEREIRA was the Chief Financial Officer.
According to court documents and statements made in court, in November 2007, New Stream launched new feeder funds, one based in the United States (“U.S. Fund”) and a series of funds based in the Cayman Islands (“Cayman Fund”). New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund. Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, BRYSON, GUTEKUNST and PEREIRA set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption. As part of the scheme, BRYSON, GUTEKUNST and PEREIRA had New Stream staff secretly reorganize the fund structure so as to effectuate the priority change.
As part of the scheme, New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open or that it was being given priority over the Cayman Fund. Moreover, New Stream continued to market to investors by concealing from them the magnitude of the actual pending redemptions and by using deceptive marketing materials that failed to disclose the existence of New Stream’s Bermuda Fund.
BRYSON, GUTEKUNST and PEREIRA each pleaded guilty to one count of conspiracy to commit wire fraud, a charge that carries a maximum term of imprisonment of five years. BRYSON is scheduled to be sentenced by Chief U.S. District Judge Janet C. Hall on August 19, 2014, and GUTEKUNST and PEREIRA are scheduled to be sentenced by Judge Hall on August 22, 2014.
The defendants were arrested on February 26, 2013. BRYSON and GUTEKUNST are currently released on $5 million bonds, and PEREIRA is released on a $300,000 bond.
This matter has been investigated by the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General, with the assistance of the Securities and Exchange Commission. The case is being prosecuted by Assistant U.S. Attorneys Liam Brennan and Michael McGarry, and Special Assistant U.S. Attorney Sheldon L. Pollock.
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