Waltham Man Charged With Investment Fraud, Reports U.S. Attorney

9 August 2006

A Waltham man was charged today in federal court with defrauding more than fifty victims in an investment fraud scheme.

United States Attorney Michael J. Sullivan and Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England, announced today that MARK R. CONWAY, age 45, of 237 Moody Street, Waltham, was charged in an Information with thirteen counts of mail and wire fraud.

The Information alleges that from approximately January, 2001 to October, 2005, CONWAY acted as the managing partner of Groundswell Partners LLC, the General Partner and management company for Groundswell Capital LP, a quantitative systematic hedge fund doing business in Massachusetts. It is alleged that as managing partner, CONWAY made numerous misrepresentations to investors including that the hedge fund would follow a specific market timing investment strategy devised in part by CONWAY. It is alleged that in fact, CONWAY, the sole trader for the fund, ceased using the promised investment strategy without notice to, or the approval of, the investors. In order to hide this deviation from the promised strategy, CONWAY created and distributed false documentation for the purpose of inducing investors to transmit additional investment monies, concealing the true status of the hedge fund account and its trading history, and causing existing investors to leave their funds under CONWAY's management. CONWAY received a fee for his management of the investment funds.

Upon detection of the fraud, the government seized more than $14 million in proceeds from accounts in the name of Groundswell Capital LP. The government is seeking forfeiture of those funds and a money judgment against CONWAY in the amount of the missing proceeds, which total approximately $5 million. The government will seek to restore any forfeited funds to the 54 victims of CONWAY's fraud, who sustained combined losses in excess of $25 million.

If convicted, CONWAY faces up to 20 years in prison, to be followed by 3 years of supervised release and a $250,000 fine.

The case was investigated by the Federal Bureau of Investigation with assistance from the U.S. Securities and Exchange Commission. It is being prosecuted by Assistant U.S. Attorney Lori Holik in Sullivan's Economic Crimes Unit and Assistant U.S. Attorney Kristina Barclay, Chief of Sullivan's Asset Forfeiture Unit.

The details contained in the Information are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Source: prnewswire

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