Hedge Fund Manager Convicted In Multi-million Dollar Investment Fraud

BATON ROUGE, LA – United States Attorney Walt Green announced today that JAMES R. HOLDMAN, age 59, of Zachary, Louisiana, pled guilty yesterday before U.S. District Judge James J. Brady to multiple counts of mail fraud based on his engaging in a scheme which defrauded investors out of millions of dollars. HOLDMAN had been scheduled for trial next week. As a result of his convictions, HOLDMAN faces a maximum term of imprisonment of forty (40) years and millions in fines and restitution to his victims.

HOLDMAN operated a hedge fund called Greenwing Capital Management, LLC. As the owner and operator of the fund, HOLDMAN solicited and received millions of dollars in investment funds from the victim investors, many of whom were retirees, including former military veterans as well as survivors of Hurricane Katrina. The victim investors hailed primarily from South Louisiana and Mississippi. Throughout 2008, HOLDMAN’s investments suffered substantial losses. However, HOLDMAN concealed his failed investments by falsely representing to the victim investors that their accounts were earning positive rates of return when, in fact, HOLDMAN had lost nearly all of their funds.

By making these false representations, HOLDMAN was able to defraud the victim investors into keeping their remaining money with Greenwing Capital and, in some cases, investing more money, thereby allowing HOLDMAN to continue receiving money in the form of fees for his own personal use and benefit. In order to continue to conceal his fraud, HOLDMAN continued to put the victim investors’ money at risk in an attempt to recoup his losses.

Ultimately, in October 2008, HOLDMAN sent out a form letter to victim investors falsely informing them that a sharp downturn in the stock market related to the financial crisis had caused a 98.67% loss in their investment in a one-month period and had forced him to close the fund. In fact, HOLDMAN had steadily been losing millions of the victim investors’ money throughout 2008.

U.S. Attorney Green stated: “Investment fraud is a devastating crime that goes on far too often. We will continue to pursue such matters aggressively, particularly when the victims include some of our community’s most vulnerable. My appreciation goes to our federal and state law enforcement partners, both here in Louisiana and in Texas and Mississippi, for helping us uncover and address this scheme.”

The case is being prosecuted by Assistant U.S. Attorneys Shubhra Shivpuri and Chris Dippel. The joint investigation was conducted by the Federal Bureau of Investigation, the Louisiana Office of Financial Institutions, the Texas State Securities Board, and the Securities and Charities Division of the Mississippi Office of the Secretary of State.