Skip to main content
Press Release

Investment Managers Sentenced In Manhattan Federal Court For Several Hundred Million-Dollar Fraud Scheme

For Immediate Release
U.S. Attorney's Office, Southern District of New York

Preet Bharara, the United States Attorney for the Southern District of New York, announced that STEPHEN WALSH and PAUL GREENWOOD, investment managers and principals of WG Trading Company, LP, and WG Trading Investors, were sentenced in Manhattan federal court in connection with a fraudulent commodities trading and investment advisory scheme. WALSH was sentenced to 20 years in prison, and GREENWOOD was sentenced to 10 years in prison. WALSH and GREENWOOD ran a fraudulent commodities trading and investment advisory scheme that raised billions of dollars, misappropriated hundreds of millions of those dollars for their own personal benefit, and then created false promissory notes and account statements to conceal their theft. WALSH pled guilty on April 25, 2014, and was sentenced on October 29, 2014, by United States District Judge Miriam Goldman Cedarbaum. GREENWOOD pled guilty pursuant to a cooperation agreement on July 28, 2010, and was sentenced today by Judge Cedarbaum.

Manhattan U.S. Attorney Preet Bharara said: “Stephen Walsh and Paul Greenwood ran an investment operation that purported to follow a conservative strategy but was in fact mostly fictional. They stole hundreds of millions of dollars of investors’ funds – much of it from sophisticated institutional investors – and lied to conceal their theft. Now they are answering for their massive fraud, and they will have to forfeit their ill-gotten gains and their freedom”

According to the Indictment, other documents filed in Manhattan federal court, and statements made during court proceedings:

From at least 1996 through February 2009, WALSH and GREENWOOD solicited $7.6 billion in investor funds on the understanding that they would invest the funds in a program called “equity index arbitrage,” which they represented was a conservative trading strategy that had outperformed the results of the S&P 500 Index for more than 10 years. As a result, several institutional investors – including charitable and university foundations, retirement and pension plans, and other institutions – invested billions of dollars. Investors either became limited partners in WG Trading Company or received promissory notes issued by WG Trading Investors that WALSH and GREENWOOD represented would pay interest at a rate equal to the investment returns earned by a limited partner of WG Trading Company.

Contrary to their representations to investors, WALSH and GREENWOOD misappropriated hundreds of millions of dollars in investor funds for their own personal use and to satisfy obligations on investments that were unrelated to the “equity index arbitrage” trading business. WALSH and GREENWOOD executed promissory notes in favor of WG Trading Investors to, among other things, conceal trading losses and their misappropriation of investor funds. These promissory notes materially misstated the financial condition of WG Trading Company and misled investors. WALSH and GREENWOOD also created and caused others to create false account statements that were sent to clients to reflect fictitious returns consistent with the returns that had been promised to those clients.

In addition to the prison sentence, WALSH, 69, of Sands Point, New York, was sentenced to three years of supervised release, and ordered to forfeit $50,743,779; and GREENWOOD, 67, of Southern Pines, North Carolina, was sentenced to three years of supervised release, and ordered to forfeit $83.5 million. The Court further ordered restitution to be paid by both WALSH and GREENWOOD in an amount to be determined.

On July 21, 2009, Deborah Duffy, the former Chief Compliance Office of WG Trading Company, pled guilty to conspiracy, securities fraud, and money laundering for her role in the fraud scheme. Duffy’s sentencing is set for January 8, 2015.

Mr. Bharara praised the work of the Federal Bureau of Investigation, and thanked the United States Securities and Exchange Commission, the United States Commodity Futures Trading Commission, and the National Futures Association for their assistance.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jessica A. Masella and Benjamin Naftalis are in charge of the prosecution.

Updated May 15, 2015

Press Release Number: 14-350