The Securities and Exchange Commission has charged Alexander James Trabulse, manager of Fahey Fund, a hedge fund, with fraud, specifically overstating the fund’s profits by as much as 200% and misusing assets to purchase cars and for shopping sprees for his family.

Trabulse founded the fund in 1997 and raised $10 million from 100 investors.

“Trabulse betrayed the trust investors placed in him by fabricating performance figures and treating the hedge fund as if it were his own personal bank account,” said Linda Chatman Thomsen, director of the SEC’s division of enforcement. “The commission is determined to hold hedge fund managers accountable when they deceive investors.”

Helene L. Morrison, director of the SEC’s San Francisco regional office, added, “Trabulse encouraged his existing investors to serve as references for new investors. As a result, his false account statements not only lulled existing investors into believing their investments were hugely profitable, but lured new investors into the fraud.”

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.