Accountant Juan Carlos Guillen Zerpa recently pleaded guilty in a Bridgeport federal court for his part in a Ponzi scheme that cost investors a half-billion dollars.
The Miami-based certified public accountant and resident of Venezuela admitted to U.S. District Judge Stefan Underhill to his role in a scheme that federal authorities believe over the past five years has cost investors in the Stamford-based hedge fund, Michael Kenwood Capital Management Group, about $500 million.
Zerpa, managing partner of international accounting firm BDO”™s Venezuelan office, Guillén MartÃnez and Asociados, acted as accountant for the hedge fund and was the second man to plead guilty in connection with the case. Zerpa was charged with one count of conspiracy to obstruct an official proceeding of the U.S. Securities and Exchange Commission.
Zerpa was represented by Miami-based attorney Robert Targ and Westport attorney James Filan.
Zerpa was arrested in early March along with Juan Carlos Horna Napolitano, a Venezuelan real estate manager. Authorities believed the two men worked with New Canaan resident and owner of the hedge fund, Francisco Illarramendi,
to defraud the SEC by drafting a false asset verification letter claiming one of Illarramendi’s hedge funds had $275 million in loan payments owed to it from Venezuelan investors. Zerpa admitted to that claim.
Illarramendi pleaded guilty in March to charges of conspiracy and securities, wire and investment adviser fraud. Authorities believe that the hedge fund manager lost millions of dollars in 2006 and instead of admitting the money was a loss, began the scheme to cover it up. Illarramendi faces a maximum of 70 years in prison and more than $5 million in fines and restitution to victims.
In the cover up, Illarramendi used money from one fund to buy stocks for another and taking new investor cash to pay for returns to older investors, similar to the design of Bernie Madoff”™s high-profile investment scheme of 2009.
Zerpa was found to have been paid $250,000 by Illarramendi for his role in the fraud and had anticipated $1 million in total compensation.
Zerpa waived his right to indictment and federal prosecutors will not seek further charges against him as part of his plea deal. Zerpa faces a maximum of 20 years in prison and a fine of up to $2.5 million when he is sentenced in July in Bridgeport. He will also have to pay restitution to the victims of the fraud and is expected to be deported following the completion of his prison sentence.
