NYC Man Used Tall Tales To Scam Investors Out Of Millions

A New York City man was sentenced to prison after telling investors a series of tall tales to scam them out of millions that he then lost while online trading.

Nicholas J. Genovese, 55, was recently sentenced to 11 years, 8 months in prison and fined $11.3 million after pleading guilty to one count of securities fraud.

For three years, Genovese took in millions from investors while falsely claiming at various times to be heir to the Genovese Drug Store fortune, a former partner at the investment bank Goldman Sachs & Company and a portfolio manager at the investment bank Bear Stearns.

Genovese pleaded guilty on Oct. 19, 2018. He was initially faced a second count of wire fraud in U.S. District Court for the Southern District of New York.

Criminal Past

In charging documents, FBI Special Agent Jordan Anderson told the court that Genovese concealed prior felony convictions for grand larceny, attempted grand larceny, forgery, identity theft, and criminal misuse of a credit card.

In addition, while incarcerated at the Big Muddy River Correctional Center in Illinois, Genovese successfully filed for bankruptcy in 1999.

Genovese reinvented himself as founder and main portfolio manager of a hedge fund called Willow Creek Investments LP. In April 2016, Genovese filed a Form D Notice of Exempt Offering of Securities with the Securities and Exchange Commission.

Genovese "gave notice that he intended to begin offering interests in the Hedge Fund to investors who would be required to make a minimum investment of $1 million," Anderson wrote. Terms of the investment prohibited investors from withdrawing their funds for 12 months, he added.

As part of his false representation to investors, Anderson said Genovese claimed to have graduated from the University of Kentucky with a bachelor's degree in finance and from Dartmouth College's Tuck School of Business. Neither school has any records supporting Genovese's claims, Anderson wrote.

Big Losses

Genovese transferred "millions of dollars in funds provided by investors in the Hedge Fund to his own personal brokerage accounts at the online brokerage firm TD Ameritrade," Anderson wrote. "He has sustained trading losses against those brokerage accounts that exceed the total value of all the assets under management by the Hedge Fund."

At the time Genovese was charged in January 2018, the hedge fund had $5.3 million in assets under management, court documents said. Two investors cited in court documents invested a total of $4 million and recouped about $1 million, court documents said.

In the meantime, Genovese lost about $8.2 million trading through TD Ameritrade, Anderson wrote.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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