Hedge Fund Manager Sentenced to 72 Months in Prison
United States Attorney Karen Hewitt announced
that Marvin Irwin Friedman was sentenced today in federal
court in San Diego by United States District Court
Judge Roger T. Benitez to serve 72 months in prison
in connection with his participation in a scheme to
defraud investors in the Global Money Management (GMM)
hedge fund. Judge Benitez also ordered Friedman to
pay $49 million in restitution to the victims in the
case.
According to Assistant United States Attorneys Faith
Devine and Phillip L.B. Halpern, who prosecuted the
case, Friedman pled guilty on February 27, 2006 to
diverting investor funds from the GMM hedge fund for
his own personal benefit or entities which he controlled,
disseminating false and misleading account statements
and partnership tax returns which overstated the performance
of the GMM hedge fund, and using new GMM investor money
to pay fictitious returns to previous GMM investors
in order to induce those investors to send money to
GMM and/or not withdraw funds the investors had already
invested.
Friedman also admitted to making false statements
on his tax returns by improperly claiming diverted
GMM investor funds as capital contributions. This enabled
Friedman to take withdrawals from GMM without having
to pay tax, resulting in a tax loss to the United States
of $481,000.
United States Attorney Hewitt said, "As a massive
fraud masquerading behind an aura of legitimacy, Global
Money Management was a huge tragedy for its investors.
Friedman betrayed the trust of these investors and
today's sentence ensures the victims of his crime will
receive some measure of justice."
DEFENDANT Case Number: 05cr1010-BEN
Marvin Irwin Friedman
SUMMARY OF CHARGES
Title 18, United States Code, Section 371 (Conspiracy)
Title 26, United States Code, Section 7206(1) (Filing
False Tax Return)
AGENCIES
Federal Bureau of Investigation
Internal Revenue Service - Criminal Investigation
