Owner of New Jersey Hedge Fund Sentenced to Six Years in Prison for Wire Fraud and Securities Fraud for Defrauding Investors of $4 Million
NEWARK, N.J. – The owner and manager of a New Jersey hedge fund was sentenced today to 72 months in prison for defrauding two investors of $4 million, U.S. Attorney Craig Carpenito announced.
Nicholas Lattanzio, 62, of Montclair, New Jersey, was previously convicted on all counts of an indictment charging him with two counts of wire fraud and two counts of securities fraud following a three-week trial before U.S. District Judge Kevin McNulty, who imposed the sentence today in Newark federal court.
According to documents filed in this case and the evidence at trial:
From June 2013 through November 2014, Lattanzio orchestrated a large-scale scheme through which he, his hedge fund, the Black Diamond Capital Appreciation Fund L.P. (BD Fund), and several other related entities collected millions of dollars in upfront fees from two unsuspecting corporate investors in exchange for the promise of future loans or investment opportunities that did not materialize. Instead of investing the victims’ money as promised, Lattanzio stole the majority of the funds and used them to pay himself more than $500,000 in salary. He used the money for numerous personal expenses, including the purchase of a $1 million home in Montclair, New Jersey, a new Range Rover, a $10,000 diamond ring, and the payment of $500,000 in credit card debt that he incurred for other personal expenses. Lattanzio lied to the victims about the status of their funds to conceal the scheme and mislead them into believing that their investments were safe.
In addition to the prison term, Judge McNulty sentenced Lattanzio to three years of supervised release and ordered him to pay restitution of $3.93 million.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, for the investigation leading to today’s sentencing. He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Marc P. Berger, and the N.J. Bureau of Securities, within the State Attorney General’s Division of Consumer Affairs, under the direction of Attorney General Gurbir S. Grewal.
The government is represented by Assistant U.S. Attorneys Nicholas P. Grippo and Daniel V. Shapiro of the Economic Crimes Unit, and Assistant U.S. Attorney Peter Gaeta of the Office’s Asset Recovery and Money Laundering Unit.