San Francisco Fund Manager Sentenced To 2 1/2 Years For Fraud Conspiracy

Nov 8 2017 | 12:36am ET

San Francisco hedge fund manager Nicholas Mitsakos has been sentenced to 2 1/2 years in prison by a New York district court judge after pleading guilty in May to one count of conspiracy to commit securities and wire fraud.

The sentencing comes more than a year after Mitsakos was first arrested in August 2016. He was accused of fraudulently soliciting investments into his hedge fund, Matrix Capital Markets, by distributing marketing materials claiming more than $60 million in AUM and annual returns ranging from 20% to 66% between 2012 and 2015.

In reality, Mitsakos managed no investor assets at all until a Cayman Islands-based fund made a $2 million investment into Matrix in September 2015 and realized the returns were based on a hypothetical stock portfolio retroactively altered to enhance performance. Prosecutors alleged he used around $800,000 of the capital on personal expenses and lost a large portion of the remaining $1.2 million that was invested.

As part of a plea agreement, Mitsakos agreed not to appeal any sentence of 37 months or shorter, and to forfeit about $861,000, according to a Reuters article. 

Mitsakos was also interim chief executive of Irvine, CA-based digital media and virtual reality company Ubiquity until the charges were filed last year.

The case is USA v. Mitsakos, U.S. District Court, Southern District of New York, No. 16-cr-00631.

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