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The Ponzi Scheme Run by Angelo Haligiannis

Posted by Larry Doyle on August 11, 2009 8:44 AM |

Angelo Haligiannis

Who is Angelo Haligiannis? Aside from being another crook on Wall Street, his is a fascinating story. I had personal interaction with Mr. Haligiannis in late 2003 and for a very fleeting moment considered allocating some money to his fund Sterling Watters. I passed on the opportunity. It was a great miss. That said, let me share my interaction with him as there are lessons here for all of us.

While working at JP Morgan Chase, I was assigned a private banker within the firm to address my own banking and financial affairs. This individual, Michael Capul, was unnecessarily aggressive but I understood that he was a producer and trying to generate business.

Mr. Capul left JP Morgan in 2003, but contacted me to apprise me that he was working in a capital raising role for a hedge fund, Sterling Watters. I let him know I had no interest. He pressed me and told me that Mr. Haligiannis was an outstanding trader and that I should at least take the time to meet him. Prior to that, I informed Mr. Capul that I wanted to see Sterling Watters’ returns.

Capul shared with me a glossy brochure which highlighted some unbelievable returns, especially during the meltdown of the Nasdaq in 2001. My trading instincts wondered how Haligiannis made his money, so I agreed to a meeting.

I was more intrigued, if not somewhat amazed, when Capul informed me that Sterling Watters was housed on the top floor of the Citicorp Tower, not exactly inexpensive space. I met them on a Thursday afternoon at 5pm.

Upon entering the office, I was struck by the fact that Capul and Haligiannis were the only individuals in the office. Where was everybody? I asked Haligiannis that very question. He dismissed it as being a Thursday evening in midtown Manahattan and his analysts and trading staff had gone out for cocktails.

I inquired about Mr. Haligiannis’ background. He shared that he was a junior trader for a few years at Merrill Lynch in the mid- 90s prior to launching his fund. I was intrigued by how quickly he developed his career.

I asked him how he made his money and generated these unbelievable returns. He talked about the proprietary nature of his models along with how many mediocre traders there were in the market. He played very much the soft sell, while Capul was the hard sell.

I will admit that for a fleeting moment I seriously considered making the minimum investment in his fund. Why didn’t I? I could not come to grips with how and why his trading operation was literally empty at 5:15pm on a Thursday. I also wondered how an individual with limited experience could grow so quickly.

Fast forward 2 years and I read on my Bloomberg terminal how Mr. Haligiannis had been arrested for operating a Ponzi scheme. I tried to contact Capul but had no success. His scheme, not unlike Mr. Madoff’s, preyed upon a host of family, friends, and close personal relationships. I immediately thought of my train ride home after my meeting when I considered allocating money to Sterling Watters.

This New York magazine article from October 2006, Take the Hedge Fund Money and Run, is a fascinating read about the life story and Ponzi scheme run by Angelo Haligiannis.

I think you will find it most interesting.

This story did have an appropriate ending as Mr. Haligiannis was apprehended in Greece in August 2007.

LD

  • fiscalliberal

    Larry – would it not be fair to say these ponzi guy’s are small players when compared to the fraud that went on in the sub prime origination area’s. I would suspect the answer would address the volume in transactions and the subsequent dollar volume

  • Larry Doyle

    Fiscal…no doubt. The sub-prime market was a multi-billion market. Not that all sub-prime mortgages were fraudulently underwritten but a meaningful number were.

    It is an ENORMOUS FRAUD which deserves to be addressed. Regrettably the more time that elapses the greater the challenge in making the case.

    I wrote this piece given my personal meeting. I never met fraudulent sub-prime originators although I would welcome comments from people who have.

  • Sons of Vaval

    I suggest watching “The Boiler Room.” A great movie about these ponzi schemes and “chop shops.”

  • Larry Doyle

    Sons….thanks for the lead. Too bad these crimes could not be kept to the screen without playing out in real life.

  • H Baskerville

    Sometimes it’s hard to listen to that little voice even when the proof is right in front of you. I’m glad you didn’t fall for it.

  • jj

    I hate to correct your story, but though he was “apprehended” in greece in 2007, he was never held on charges. Hes living the high life on the money he stole.

  • Larry Doyle

    JJ…..

    Are you kidding me? This guy is under house arrest, flees the country, is apprehended overseas, and is now living the high life.

    Can you give me some details validating your assertion.

    I find this very hard to believe. If in fact that is the case, I welcome writing about this travesty of justice.

    Details, please!!! I call challenge!! If this were true, I think it would have been widely publicized.

  • jj

    Larry, Its a fact, look at NY post article last year. Reason this story went under the radar is because Madoff became much more important. Guarantee u I’m correct

  • Larry Doyle

    JJ,

    I surfed the net looking for substantive evidence of Haligiannis being freed after having been apprehended. Maybe it is my lack of ‘surfing’ skills (very possible) but I could not find anything specifically in regard to a Post story.

    Perhaps I should not be surprised if he were freed but that would be a new low.

    If you can provide a link to a real story, I will highlight it.

    Thanks.

  • jj

    © AP
    20.09.2007 13:07:17

    (live-PR.com) – ATHENS, Greece (AP) – A former U.S. hedge fund manager wanted in New York for allegedly defrauding investors has been arrested for a second time in Greece, police said Thursday.
    Angelo Haligiannis, former president of hedge fund Sterling Watters, was first arrested on an international warrant on the southern island of Crete last month after
    a tip-off from a man claiming to have been one of his victims. He was freed a day later pending an extradition request from the United States.

  • Larry Doyle

    JJ….I am going to look into this further. Thanks for that link. Something is clearly wrong here.

  • Jim

    Larry et al:
    what was the verdict? curious to know

  • Larry Doyle

    Jim,

    Thanks for the prompt. I am heartened to see that Mr. Haligiannis seems to be back in custody. From Wikipedia, I retrieved the following:

    Angelo Haligiannis managed the hedge fund Sterling Watters as a Ponzi scheme and pled guilty in 2005 of defrauding investors of tens of millions of dollars. He fled an expected 15 year jail term the day before his scheduled sentencing on January 11, 2006.[1][2]

    He was recaptured on the island of Crete in August, 2007, conditionally released by Greek authorities, and then arrested again in September 2009.[3]
    [edit] References

    1. ^ Kolker, Robert (October 23, 2006). “Take the Hedge-Fund Money and Run”. New York Magazine. http://nymag.com/news/businessfinance/23171/. Retrieved March 14, 2009.
    2. ^ “From Ponzi to Madoff”. The Wall Street Journal. March 13, 2009. http://online.wsj.com/article/SB123685693449906551.html?mod=article-outset-box#project%3DPONZI1208%26articleTabs%3Dinteractive. Retrieved March 13, 2009.
    3. ^ Grohmann, Karolos (September 20, 2007). “Former US hedge fund manager re-arrested in Greece”. Reuters. http://www.asiaone.com/News/AsiaOne%2BNews/World/Story/A1Story20070920-26224.html. Retrieved March 14, 2009.

  • jj

    Looks to me like someone updated wikipedia to make it look like angelo was recaptured to throw any further investigative reports. It is not true. He’s still running around.

  • sk

    i know the family he married into and the sham divorce. they should confiscate the assets of the father in law and the ex wife to pay the victums. the father in law was arrested several times and has made and lost millions since 1993. he is ripping off the school construction authority, and the people he does business with. he and the ex wife his daughter. are still living in a multimillion dollar mansion on long island.

    • Rasp

      I was completely blown away with this story. You mean to tell me after all this he is now living lavishly in Long Island, NY?






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