Anthony J. Klatch, II Pleads Guilty to Investment Fraud Scheme
| U.S. Attorney’s Office October 28, 2011 |
Kenyen Brown, U.S. Attorney for the Southern District of Alabama, is pleased to announce that Anthony J. Klatch, II, of Tampa, Florida and Sugarloaf Township, Pennsylvania, has pled guilty to one count each of conspiracy, securities fraud, wire fraud, and money laundering. These convictions all stem from his involvement in a fraudulent investment scheme involving the TASK Capital Partners hedge fund. All the TASK fund investors were located in either the Mobile area or in Florida. Combined, they lost a total of $2.3 million. In addition to spending time in prison, Klatch will be required to forfeit assets associated with his fraudulent activities. As part of his plea agreement, Klatch also agreed to the following facts about his involvement:
In January 2009, Anthony J. Klatch, II and Timothy Sullivan created the TASK Capital Partners, LP hedge fund, with Klatch serving as the fund’s Senior Managing Director and Chief Investment Officer.
After creating TASK, Klatch, Sullivan, and others solicited individuals to invest in the fund. This was done through a variety of means, including, but not limited to, providing potential investors with investment prospectuses, which contained material misrepresentations and material misleading omissions. At least one potential investor received this prospectus via e-mail.
From April through October 2009, seven investors invested approximately $2.3 million in the TASK hedge fund. Along with the seven investors, Klatch and Sullivan each invested $1 in TASK. Once investors agreed to invest money in the TASK fund, the investors used interstate wires to transfer, or to authorize a transfer of, money from their accounts into accounts managed by TASK. Wire transfers, or the authorizations to transfer money, for three of the TASK investors originated in the Southern District of Alabama.
Between April 2009 and December 2009, Klatch and Sullivan managed the $2.3 million of investment capital in TASK. However, only about 60 percent of this amount was ever actually invested. This 60 percent was lost over the course of eight months through a series of investments. In December 2009 and January 2010, all TASK investors were told by Klatch, Sullivan, and others that their entire investment had been lost in a single bad trade.
The remaining 40 percent of money in TASK was used for non-investment related expenditures. This includes $180,592.45 which ended up in Klatch’s personal bank account. Before ending up in his personal account, this money was moved through different bank accounts, via a series of transactions, which Klatch knew were designed in whole or in part, conceal or disguise the nature, location, source, ownership, or control of the proceeds.
In addition to his involvement in the TASK scheme, Klatch admits that he was also involved in similar fraudulent investment schemes involving American Private Equities, LLC, ARM Capital Management, LLC, and Vigilant Capital Management, LLC. Furthermore, Klatch agrees that the total fraud amount associated with these other funds will be included as relevant conduct for sentencing purposes. The parties agree that the exact amount of the total fraud associated with the TASK, American Private Equities, ARM, and Vigilant funds will be determined at sentencing.
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U.S. Attorney Kenyen Brown stated, “It’s unfortunate that some among us would not give a second thought to defrauding a neighbor of their life savings in order to illegally line their own pockets. My office will do everything in its power to stop the criminal element from taking advantage of the hard working and law abiding citizens of southern Alabama.”
The statutory maximum sentence on the conspiracy and securities fraud convictions is five years. Klatch faces a maximum of 20 years on the wire fraud and money laundering convictions. He is scheduled to be sentenced by Chief Judge William H. Steele in April 2012. This matter was investigated by the FBI in Mobile and prosecuted by the U.S. Attorney’s Office for the Southern District of Alabama.