Investment Fund Manager Sentenced in Brooklyn Federal Court to 36 Months’ Imprisonment for Orchestrating Multi-Million Dollar Fraud Schemes

Earlier today, in federal court in Brooklyn, Diane W. Lamm, a manager of Capital L Financial Group, LLC (Capital L) and Aegis Capital Fund, LLC (Aegis Capital Fund), was sentenced to 36 months’ imprisonment having pled guilty to two counts of securities fraud for defrauding investors out of millions of dollars in two separate schemes.  Lamm pled guilty to the charges on February 5, 2016.  The Court also ordered Lamm to pay restitution to the victims in the amount $15,640,582.46.  The sentencing took place before United States District Judge Frederic Block. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“To support their luxurious lifestyles, Lamm and her co-defendant stole millions of dollars from investors and their retirement accounts,” stated United States Attorney Donoghue.  “Today’s sentence sends a powerful message of deterrence to others who would consider deceiving investors.  This Office, together with our partners at the FBI, is committed to holding financial fraudsters accountable for their conduct.”

“Investment advisers are required to act in the best interest of their clients. Lamm did just the opposite by taking advantage of those who trusted her with their money, benefitting personally from illegitimately obtained profits,” stated FBI Assistant Director-in-Charge Sweeney.   “The FBI has dedicated a significant amount of resources to uncovering financial crimes targeted against individuals, businesses, and industries. Today’s sentencing serves as a fine example of our continued success in this area.”

Between 2009 and 2013, Lamm was involved in two schemes to steal investors’ money.  In the first, she and her co-defendant, John R. Lakian, obtained more than $11 million by promising Capital L investors that their money would be used to purchase, consolidate, and sell registered investment advisory businesses.  Instead, Lamm and her co-defendant diverted more than $3 million to themselves and to entities, including hospitality businesses that they owned and controlled.  In the second scheme, Lamm and her co-defendant embezzled money through their management of Aegis Capital Fund, a North Carolina-based investment fund that was placed into liquidation in 2011.  Prior to the liquidation, Lamm and her co-defendant directed more than $2.4 million of Fund assets into hospitality businesses without informing the Fund’s investors that Lamm and her co-defendant owned and controlled these businesses.  More than $1.9 million of the $2.4 million of Fund assets was never recovered by the investors.  Additionally, following the Fund’s liquidation, instead of returning investment proceeds to investors, Lamm and her co-defendant diverted more than $2 million of investors’ money to themselves and to their hospitality businesses.  The government has identified credit card charges and company expenses for purposes unrelated to the purchase, consolidation and sale of registered investment advisers.  Charges were incurred, for example, for clothing, furniture and fine art from luxury stores such as Bergdorf Goodman, Gucci and Paul Stewart; stays at the Palace and Waldorf Astoria hotels in New York City; getaways at luxury resorts; and items for Lamm and her co-defendant’s restaurant business.

Lamm’s co-defendant, John R. Lakian, pleaded guilty in February 2016 to two counts of securities fraud.  He was sentenced, on December 15, 2017, to 55 months’ imprisonment and ordered to pay restitution to the victims in the amount $15,640,582.46.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Whitman G.S. Knapp is in charge of the prosecution.  Assistant United States Attorney Karin Orenstein of the Office’s Civil Division is responsible for the forfeiture of assets.

The Defendant:

DIANNE W. LAMM

Age: 57

New York, New York

E.D.N.Y. Docket No. 15-CR-0043 (FB)