Greenwich Time – A co-founder of the collapsed Connecticut-based Bayou hedge funds admitted in federal court Thursday that he conspired to defraud investors of more than $10 million, prosecutors said.<\/p>\n
U.S. Attorney Michael Garcia said James C. Marquez pleaded guilty to conspiracy to defraud and could be sentenced to up to five years in prison.
Last year, two top officers of the funds, Samuel Israel III and Daniel Marino, pleaded guilty to conspiracy and various fraud charges in connection with the Bayou scandal, which the government claims cost investors as much as $450 million. They are awaiting sentencing.<\/p>\n
Marquez admitted that between 1996 and 2001 the three men lured investors into the Stamford, Conn.-based Bayou funds by creating fake financial statements that claimed the funds were making big profits when they were actually losing money, Garcia said.<\/p>\n
A telephone call to Marquez’s lawyer, Stan Twardy, was not immediately returned Thursday.<\/p>\n
Hedge funds are typically investment companies that use high-risk strategies such as borrowing money and selling short to make large capital gains.<\/p>\n