Investment Fund Manager Sentenced for Orchestrating Multi-Million Dollar Fraud Schemes

https://www.justice.gov/usao-edny/pr/investment-fund-manager-sentenced-brooklyn-federal-court-55-months-imprisonment

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

FOR IMMEDIATE RELEASE
Friday, December 15, 2017

Investment Fund Manager Sentenced in Brooklyn Federal Court to 55 Months’ Imprisonment for Orchestrating Multi-Million Dollar Fraud Schemes

Defendant Used Investors’ Money to Pay for Outside Business Ventures and Personal Expenses

Earlier today, John R. Lakian, a manager of Capital L Financial Group, LLC (Capital L) and Aegis Capital Fund, LLC (Aegis Capital Fund), was sentenced to 55 months’ imprisonment, having pleaded guilty to two counts of securities fraud for defrauding investors out of millions of dollars in two separate schemes. The Court also ordered Lakian to pay restitution to the victims in the amount $15,640,582.46. The sentencing took place before United States District Judge Frederic Block at the federal courthouse in Brooklyn.
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Between 2009 and 2013, Lakian was involved in two schemes to steal investors’ money. In the first, he and his co-defendant, Diane Lamm, 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, Lakian and his co-defendant diverted more than $3 million to themselves and to entities, including hospitality businesses, that they owned and controlled. In the second scheme, Lakian and his 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, Lakian and his co-defendant directed more than $2.4 million of Fund assets into hospitality businesses without informing the Fund’s investors that Lakian and his 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, Lakian and his 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 or 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 Lakian and his co-defendant’s restaurant business.
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