Fund Manager Sentenced Six Years on Tax Charges

The founder and principal manager of the Genesis Fund, a bogus foreign exchange fund that operated like a Ponzi scheme, has been sentenced to nearly six years in prison on tax charges.

John S. Lipton, formerly of Mission Viejo and Laguna Hills, Calif., was sentenced by U.S. District Judge Dale S. Fischer in Los Angeles to 70 months in prison. The court also ordered Lipton to pay restitution of $2,915,427.16 to the IRS.

Lipton earlier pleaded guilty to conspiracy to defraud the U.S. on tax evasion. Lipton and several co-defendants were indicted on charges stemming from the operation of Genesis, which ran falsely from May 1998 to June 2002, attracting millions of dollars. The remaining defendants are scheduled to begin trial in April 2011.

According to the indictment, the defendants falsely claimed that investors received monthly returns of 4%. Furthermore, the defendants promoted the Genesis Fund as having no reporting obligations to the IRS due to offshore bank accounts.


10% of Big Businesses Eye Cutting 401(k) Match

The tough luck drags on for workers at America's biggest corporations-when it comes to their 401(k) match.

And for those workers at companies that have continued matching 401(k) retirement savings plan contributions, they could be in for a shock of their own. Another 10% of big businesses plan to reduce or eliminate matches in the next year, according to the Society for Human Resource Management.

This is on top of the 20% of large employers that did away with this perk beginning in September 2008 when Lehman and Bear bankrupted. So far, only about half have reinstated the benefit, according to Towers Watson.


TD Ameritrade Sued Over ARS, Reserve Yield Plus

Pennsylvania regulators have filed civil complaints against TD Ameritrade over its sale of the Reserve Yield Plus fund and auction-rate securities to investors across the nation.

Reserve allegedly characterized Reserve Yield Plus as a cash-enhanced product, not the money market fund that TD Ameritrade brokers told investors it was on recorded telephone calls, starting in December 2006. The Pennsylvania Securities Commission complaint also says the brokerage firm continued to sell the fund even after it broke the buck in November 2007, under senior management executives' orders to sell it "strategically" to certain customers.

Yield Plus, once topping $1.2 billion, now has about $39.7 million remaining to cover legal costs, having distributed about 94.8% of its assets to investors.

In a related suit, Pennsylvania has ordered TD Ameritrade to repurchase $26.5 million in auction-rate securities held by state residents.

The Pennsylvania commission says it is leading a 12-state task force of state securities regulators formed through the North American Securities Administrators Association (NASAA) in investigating TD Ameritrade's marketing and sales of ARS. Nationwide, TD Ameritrade investors currently hold approximately $420 million of ARS. MME



Quote of the Week

“For the Fed to come in and foreclose on properties puts it at some reputational and political risk. If the Fed can’t figure out how to recast the terms of these mortgages and work with borrowers—it’s emblematic of the problems the government has had with other programs over the last year and a half.”

- Vincent Reinhart

Economist, American Enterprise Institute

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.