There’s one born every minute…
A short time ago, the SEC issued this release charging a San Francisco hedge fund manager with defrauding investors. According to the litigation release, Alexander James Trabulse, who ran the Fahey Fund, inflated the fund’s returns by over 200%. The complaint also charges that Trabulse used investor’s money to purchase cars, home theater equipment, real estate and a European shopping spree for his now ex-wife.
The fund had over 100 investors and had raised about $10 million — pocket change, as far as hedge funds go, but not an insignificant chunk of change. But you have to wonder why none of those 100 people — or the people who were advising them — bothered to check out the fund’s website. Seriously! I’ve seen web pages designed by grade schoolers that look more professional than that. And the fact that the site contains some promo for a European musical tour that took place two years ago? Couldn’t they have found someone on Craigslist to update their site and make it look a bit more professional?
Sure, a fancy website can easily mask a fraud and a simple website — like Berkshire Hathaway’s — isn’t always a negative indicator. But the Fawley Fund site really makes me wonder about how gullible some investors really are.
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September 26th, 2007 at 7:01 pm
The fund manager’s email address is bigcheese@faheyfund.com - you would think that would set off an alarm with an investor somewhere
Even more important than the crappy website is the fact that the website has a lot of obvious SEC violations (public subscription documents, public fund structure information etc). You would think that a ’sophisticated investor’ would take note of these things.
October 2nd, 2007 at 10:36 am
I’ll have to take everyone’s word, becuase they took it down. Shame, i could have used a laugh this morning. Anyhow it sure brings home the lesson that even basic, common sense due diligence will sometimes uncover blatent fraud - reminds me of someone who cold-called me with a pitch for ownership interests in some sort of natural gas well, and when I checked his name on the NASD website, found he had 1) been de-registered, and 2) had a record of indecent conduct - with a 17 year old!
Caveat sucker, it’s a jungle out there
October 2nd, 2007 at 11:51 am
Apparently, they’ve taken down the European tour part of the site, which helped seal the authenticity. Hope someone out there got a screen shot of that. I should have, but forgot. If you have one, let me know.
October 2nd, 2007 at 2:08 pm
The old page has been taken down. Anybody interested in seeing the new page can go to the Internet Wayback Machine. (That’s right. What happens on the Web, STAYs on the Web:-)
For yo’ convenience:
http://web.archive.org/web/20050827014239/http://www.faheyfund.com/