Receiver distributes USD 1.1m to victims of US hedge fund manager

Tue, 26/10/2004 - 07:21

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A US court has approved an SEC plan to distribute USD 1.1m to victims of former hedge fund manager Stevin R.Hoover and Chestnut Fund LP.

The SEC announced that the Honorable Richard G. Stearns of the US District Court for the District of Massachusetts has approved an Initial Distribution Plan to distribute USD 1.1 million to Hoover's victims.

The distribution will be supervised by Keith D. Lowey, CPA, of Foxborough, Massachusetts, who was appointed by the court as receiver over the Chestnut Fund LP, the hedge fund once managed by Hoover.

In its complaint, the Commission alleged that between 1995 and 2001, Hoover and his wholly-owned entities misappropriated funds from investment advisory clients, including the hedge fund.

The Commission also alleged that Hoover solicited and obtained investments in the hedge fund by making fraudulent misrepresentations to prospective investors, and that Hoover attempted to conceal his misappropriations by distributing fictitious account statements to investors.

As previously announced, on 11 February 2003, the court entered a Final Judgment, by consent, ordering Hoover and/or his wholly-owned entities to pay disgorgement of ill-gotten gains and prejudgment interest in the amount of USD 1,011,007.48, and permanently enjoining them from future violations of the relevant provisions of the federal securities laws.

On 26 February 2003, the Commission entered an administrative order, by consent, that permanently bars Hoover from association with an investment adviser.

In a related criminal proceeding, Hoover pleaded guilty to criminal charges that he defrauded investment advisory clients out of nearly USD 200,000 in violation of Section 206(2) of the Investment Advisers Act of 1940. Hoover is currently serving three years of supervised release, following an 18 month prison sentence.

For further information see LR-17981; LR-17825; LR.-16938; LR-17236; LR-17240; LR-17284; LR-17487; LR-17666). [SEC v. Hoover and Hoover Capital Management, Inc., Civ. A. No. 01 CV 10751, RGS, D. Mass.] (LR-18934).