The U.S. Department of Justice has brought charges against Paul Eustace, founder, president and principal trader of Philadelphia Alternative Asset Management, which the Commodity Futures Trading Commission shut down two years ago.

The Justice Department says Eustace defrauded investors of $200 million by presenting positive returns to them when, in fact, the fund was losing money. He then fraudulently took incentive fees, the government said, and used $500,000 of his fund’s investment to pay a legal settlement.

“This case demonstrates the continuing commitment of this office to a fraud-free marketplace for securities and commodities,” said U.S. Attorney Pat Meehan of the Eastern District of Pennsylvania. “Those who are entrusted with investor funds should know that we will continue to prosecute individuals who defraud investors and the regulatory agencies overseeing those markets.”

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.