LawFuel.com – Legal Newswire
LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, and JOSEPH M. DEMAREST, JR.,
the Assistant Director-in-Charge of the Federal Bureau of
Investigation’s New York Field Division (“FBI”), announced today
that MARK BLOOM, 57, of New York, New York, was arrested this
morning by special agents of the FBI on securities fraud and wire
fraud charges. According to the two-count Complaint unsealed
today in Manhattan federal court:
From at least July 2001 through February 2009, MARK
BLOOM defrauded investors in North Hills Fund (“NHF”), an
investment partnership he managed. In a Private Placement
Memorandum and in marketing materials he provided to investors,
BLOOM represented that the North Hills Fund was a “fund of funds”
which would invest in a diversified portfolio of hedge funds in
order to lessen the risk of the stock market and achieve a return
of approximately 12 percent.
Contrary to his representations to investors that North
Hills Fund’s assets would be diversified among hedge funds,
BLOOM, starting in about February 2004, concentrated at least 50
percent of North Hills Fund’s capital in a commodities trading
pool known as the Philadelphia Alternative Asset Fund (“PAAF”),
without disclosing NHF’s investment in PAAF to North Hills Fund’s
investors until about July 2005.
BLOOM also failed to disclose to NHF investors that he
had a “referral agreement” with PAAF’s operator pursuant to which
he received commissions for steering funds into PAAF and other
funds managed by its operator. BLOOM received approximately $1.6
million in undisclosed commissions from PAAF’s operator during
2004 and 2005.
Additionally, BLOOM misappropriated millions of dollars
from NHF, which he used for personal expenditures, including the
purchase of a luxury apartment in Manhattan. In November 2008,
BLOOM admitted to certain North Hills Fund investors demanding to
know what had happened to their investments that he had borrowed
approximately $10 million from the fund, which he had used to buy
the apartment, among other things.
At the time BLOOM formed the North Hills Fund, he was
employed at WG Trading Company, a broker dealer.
BLOOM is expected to be presented today before United
States Magistrate Judge DOUGLAS F. EATON in Manhattan federal
court.
BLOOM is charged with one count of securities fraud and
one count of wire fraud. The securities fraud count carries a
maximum sentence of 20 years in prison and a maximum fine of $5
million, or twice the gross gain or loss from the offense. The
wire fraud count carries a maximum sentence of 20 years in prison
and a maximum fine of $250,000, or twice the gross gain or loss
from the offense.
Mr. DASSIN praised the investigative work of the FBI in
this case, and thanked the United States Securities and Exchange
Commission and the United States Commodity Futures Trading
Commission for their assistance. He added that the investigation
is continuing.
Assistant United States Attorneys JESSICA A. ROTH, JOHN
J. O’DONNELL, and AMY LESTER are in charge of the prosecution.
The charges contained in the Complaint are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.
09-042 ###
