A hedge fund manager in Washington has been charged with defrauding many Maryland residents of millions of dollars after he solicited their money at free lunch seminars and hid losses with phony statements, according to The Washington Post.   John Williams violated eight civil statutes of state security laws, Attorney General Douglas F. Gansler said. Williams’ firm’s assets were frozen by Prince George’s County Circuit Court.   William met Canadian hedge fund trader Stephen Chesnowitz in an Internet chat room and they became involved in the scheme, according to a court filing by Gansler’s office.   The two men lured people through mass mailing advertisements offering a free “gourmet meal” and the opportunity to “earn excellent returns with a guarantee against market risk.” More than 150 people went to the seminars, and Williams collected a total of $9 million. He then transferred the money to Chesnowitz’s hedge funds in Canada and Cayman Islands.   Once the money was made, the two invested in unstable investments, including a financial firm that has since become defunct, a bed and breakfast in Canada, and two vintage cars, according to the court filing. Investors were never told about the deals.   Investors were able to log on to a website to check on how the hedge funds were doing, and the false statements showed investments were profitable. In one day, April 28, 2006, the hedge fund suffered $626,280 in losses, the filing said.   Williams, “knowing the money was gone, continued to take fees” based on phantom returns, the court filing said. In total, Williams paid himself $586,000 for managing the investments.   Chesnowitz has not been charged, but officials are looking into his activities. The investigation could be hindered because he is not located in the U.S.    The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.  

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