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The Ponzi Scheme Run by Angelo Haligiannis

Posted by Larry Doyle on August 11th, 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






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