While Amerindo Investment Advisors founder and CEO Alberto Vilar anxiously awaits his next day in court, all indications are that his struggling Amerindo Technology fund is gasping its last breaths.

The 64-year-old Vilar is accused of using an investor's money, which was intended for an investment separate from the Amerindo Technology fund, to pay outstanding personal and business expenses. His partner, Gary Tanaka, 61, has also been implicated. They were arrested three weeks ago. Tanaka is free on a $10 million personal recognizance bond. Vilar, however, remains in a holding cell in Lower Manhattan just a stone's throw from the investment bankers, brokers and traders that helped make his fund the darling of the technology boom unable to raise a $4 million bond.

His lawyer, Susan Necheles, of Haftez & Necheles in New York, said late last week that Vilar's inability to raise bail is confounded by "a logistical matter." She expressed confidence that it would be made "very soon."

The outlook for Vilar's mutual fund, however, isn't nearly as bright.

While the fund's board of directors is still conducting an internal audit to ensure that no malfeasance occurred, early indications are that everything was on the up and up. But according to Victor Siclari, a partner with the law firm Reed Smith in Pittsburgh, since the court has issued a temporary injunction against Amerindo Investment Advisors, its contract to manage the fund has been automatically terminated.

"When that injunction was issued, that investment advisor and those individuals could no longer serve in their capacities with the mutual fund," Siclari explained. "That is put into place to protect funds and shareholders. You don't want bad boys, or girls, involved in public money activities."

In fact, the board issued a sticker to the fund prospectus stating that the contract with Amerindo Investment Advisors expired on May 31, four days after the arrests of Vilar and Tanaka. The board has appointed the fund's CCO, Dana Smith, as acting president.

The board also appointed Munder Capital Management to take over day-to-day operations. Since the switch was made without shareholder approval, according to Securities and Exchange Commission regulations, the management contract cannot last longer than 150 days. The fund will pay an annual advisory fee equal to 1% the fund's average daily net assets, the board indicated in an SEC filing.

While Munder, a tech-savvy Birmingham, Mich.-based firm with $36.7 billion in assets under management, seems a logical choice at first blush, Morningstar Analyst Dan Lefkovitz said it's no reason to think the fund has much of a future.

"We're a little confused as to why the Amerindo board chose Munder, rather than a more stable and prudent asset manager," said Lefkovitz, who spoke with the fund's new co-managers, Ken Smith and Robert Wald, last week.

Amerindo's board, which could not be reached for comment, stated in an SEC filing that Munder was selected for its "disciplined investment approach, sector expertise and overall performance history."

Munder, meanwhile, is referring press inquiries to its New York public relations firm, Starkman & Associates. Spokeswoman Jacqueline Condie said, "There is no comment beyond what has been issued through the [SEC] filing and the press release."

Smith currently serves as manager of the Munder Internet fund, which was previously known as the Munder NetNet fund. Like the Amerindo fund, the Munder Internet fund soared during the tech boom of the late 1990s. Fund assets reached $12 billion and at one point it was closed to new investors. It now has $664 million in assets and year-to-date returns are off by 7.74%, according to Morningstar.

Comparatively, Amerindo had $98 million under management as of April 30, according to Financial Research Corp., a far cry from its peak of $700 million.

Wald, who left Munder for a stint with the healthcare unit of AIM Investments, currently serves as manager of the Munder Healthcare fund. It has $219 million under management. Wald comes to the team, presumably, because the Amerindo fund has added healthcare names to its portfolio in recent years.

"It could be argued that Amerindo board chose a management that invest along fairly the same lines as the Amerindo technology fund had in the past, but the styles are quite different," Lefkovitz said, adding that Smith declined to elaborate on how the Amerindo fund will be managed.

The Amerindo fund, he noted, has less than 15 holdings, while the Munder Internet fund generally runs with about 50 or 60 stocks in the portfolio, "and they balance some of the smaller cap, more speculative names with some larger blue-chip stocks."

Given the current state of affairs with Vilar and Tanaka, Lefkovitz said it's difficult to speculate on the fund's future. Despite recent news that major investors are likely to jump ship in coming weeks, Lefkovitz admitted that it's feasible that the fund could "limp along under Munder management for a long time" or perhaps be rolled into an existing Munder fund.

Roy Weitz, publisher of the online fund newsletter FundAlarm.com in Tarzana, Calif., expects that Munder will soon dissolve the fund.

"The trustees, in my opinion should shut it down," Weitz said

Necheles said that since his incarceration, Vilar has not discussed the future of the fund.

There may, however, be a silver lining. The Amerindo fund, Siclari said, represents one of the first cases since the mutual fund scandal broke 18 months ago that the industry's checks and balances, not federal regulators, have been left to clean up the mess.

"The SEC asked to be appointed as a temporary receiver for the fund and the court rejected it," he said. "This is only the second time a judge has not granted a receivership request by the SEC. You could say the SEC, which took a lot of criticism for the not uncovering the fund scandal, was acting hastily and the judge held them back and his given the directors time to work this out on their own."

As for Vilar and Tanaka, who have been indicted by a federal grand jury and face upwards of 10 years in prison, they, too, have their work cut out for them.

(c) 2005 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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