SEC: Federal Judge Orders Asset Freeze Amid Allegations That ‘Locust Offshore Fund Ltd.’ Was A Fraud Pulled Off By Man Who Falsely Claimed 2 Harvard Degrees; Andrey C. Hicks Accused Of Faking Academic And Employment Pedigrees And Sanitizing Fraud Through Website

In yet another bizarre and disturbing development on the fraud front, the SEC went to federal court in Massachusetts yesterday, leveling spectacular allegations of financial deceit against Locust Offshore Management LLC of Delaware and Cambridge, Mass., and its principal, Andrey C. Hicks of Boston.

Named a relief defendant was Locust Offshore Fund Ltd., a purported hedge fund in the British Virgin Islands that is alleged to have been the bogus recipient of ill-gotten gains.

Neither of the Locust entities was registered with the SEC, and claims that Locust was properly registered and in good standing in the British Virgin Islands were false, the agency alleged.

Although Hicks, 27, planted the seed he had both undergraduate and graduate degrees from Harvard, the claims were false, the SEC said.

Nor was Hicks ever employed by Barclays Capital as he claimed, the agency charged.

Meanwhile, Ernst & Young — contrary to the claims of Hicks — was not the auditor of the Locust Fund, the SEC charged. At the same time, Credit Suisse was not the fund’s prime broker and custodian, and the fund was not incorporated in the British Virgin Isles as Hicks had claimed, the agency added.

The scheme operated in part through a website designed to trick investors, the SEC said. Despite high-sounding claims on the site that the “firm’s quantitative strategies are based on mathematical models developed by the fund’s manager, Andrey C. Hicks, during his tenure at Harvard University and are executed by computer software,” Hicks attended Harvard for only three semesters as an undergraduate — and flunked out twice, the SEC alleged.

He was not permitted to re-enroll after his second dismissal, the SEC charged. During his brief time at Harvard, Hicks took only one math course, carding a D-minus, the agency said, quoting records from the prestigious university.

None of these things, however, kept Hicks from creating a website and using it to mask the fraud and sanitize the scheme, establishing Locust Offshore Management LLC  as a Delaware corporation, opening business and personal checking accounts, creating offering materials for his unregistered firm purportedly operating offshore — and hawking his fraud scheme, the SEC charged.

Hicks met one of his customers on an “airplane,” telling his fellow voyager that Locust had $1.5 billion under management , that he had a PhD in “applied mathematics” from Harvard and had developed his trading skills at Barclays before setting out on his own at Locust, the SEC charged.

Among other things, Hicks told his airplane mark that Barclays was a “large investor” in the Locust fund and touted the Locust website. The pair exchanged business cards, the SEC said.

After meeting Hicks on the plane, the investor visited the Locust website last month, viewing purported data about the firm, including a claim that the fund had more than $1.2 billion under management and had generated  “an incredible year-to-date return of 78.59 percent,” the SEC alleged.

“All of the financial data appeared on web-pages that described the data as ‘powered by Credit Suisse,’ creating the false and deceptive impression that the data came from Credit Suisse,” the SEC charged.

In reality, the SEC charged, bank records showed that the enterprise had only about about $1.7 million under management.

Based on the false information provided by Hicks, the investor plowed $100,000 into the scheme, the SEC said, alleging that, within days of the September investment, Hicks moved the money into his personal checking account.

Between June 2, 2011 and Oct. 11, 2011, other investors from Massachusetts, Minnesota and Iowa appear to have plowed more than $1.6 million into the scheme — with $83,000 being the low-end investment and $500,000 being the high end, the SEC alleged.

“Substantially all” of the money was transferred to to “checking and savings deposit accounts in the sole, personal name of Hicks,” the SEC charged.

U.S. District Judge Richard Stearns ordered an asset freeze, the SEC said.

 

About the Author

2 Responses to “SEC: Federal Judge Orders Asset Freeze Amid Allegations That ‘Locust Offshore Fund Ltd.’ Was A Fraud Pulled Off By Man Who Falsely Claimed 2 Harvard Degrees; Andrey C. Hicks Accused Of Faking Academic And Employment Pedigrees And Sanitizing Fraud Through Website”

  1. Locust Fund ???

    Geez, even the name is stolen

    That’s the name of one of the hedge funds in Wall Street: Money Never Sleeps.

      (Quote)

Leave a Reply