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SEC Charges Absolute Fund Advisors With Operating “Ponzi-like” Scheme

By George Miller of Shustak Reynolds & Partners, P.C. posted on Monday, June 4, 2012.

In late May, the SEC filed a Complaint in the U.S. District Court for the Southern District of New York against Absolute Fund Advisors, LLC, Absolute Fund Management, LLC and Jason J. Konior seeking an injunction preventing the defendants from operating a “Ponzi-like” scheme allegedly orchestrated by Mr. Konior.

As alleged in the Complaint, from at least November 2011 through the present, the defendants solicited approximately $11 million in private placement investments in Absolute Fund, LP, a limited partnership investment vehicle Mr. Konior created. The SEC claims the defendants misrepresented material facts regarding the investments and flat-out misappropriated up to $2 million of investor funds to, amongst other things, satisfy redemption requests from earlier investors.

According to Bruce Karpati, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, “Konior falsely portrayed Absolute Fund as a legitimate investment vehicle designed to maximize investors’ access to trading capital in order to grow their hedge fund businesses … In reality, Konior’s operation became a way for Konior to funnel cash to his firms and himself for unauthorized purposes.” The SEC recently obtained a court order freezing Konior’s and his companies’ assets while it continues its investigation.

If you have been the victim of misrperesentations or fraud in connection with the purchase of an unsuitable private placement investment, you may contact our firm’s managing partner, Erwin Shustak, at (619) 696-9500 or [email protected]. Our firm has handled numerous claims on behalf of private placement investors involving unsuitable, “Ponzi-like” private placement investments.

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