Manager of Hedge Funds Pleads Guilty to Mail Fraud
Alexander Trabulse Admits to Engaging in Fraudulent Conduct
|U.S. Attorney’s Office November 03, 2009|
SAN FRANCISCO—Alexander James Trabulse pleaded guilty in federal court today to one count of mail fraud, United States Attorney Joseph P. Russoniello announced.
In pleading guilty, Trabulse, who managed San Francisco-based hedge funds known as the Fahey Hedge Fund and Fahey Financial Group Inc., admitted to engaging in fraudulent conduct that caused investors to lose approximately $8.3 million. Specifically, in or about 1998 through 2007, Trabulse deceived investors by mailing fraudulent periodic account statements that made materially false representations about the true disposition of their funds, and materially overstated the investors’ returns and account balances. By in or about 2006, approximately 165 investors had invested a total principal amount of approximately $17.6 million. Trabulse misled these investors into believing that their investments in the Fahey Funds were worth a total of approximately $50 million, when in fact their investments were worth tens of millions of dollars less than that amount.
Trabulse, 62, of Colma, Calif., was originally charged in a complaint on Jan. 2, 2009, with one count of mail fraud, in violation of 18 United States Code Section 1341. Subsequently, Trabulse waived indictment and was charged in an Information on April 3, 2009 with the same offense. After his arrest in January, Trabulse posted bond and has been out of custody, subject to certain terms and conditions of release.
Trabulse is next scheduled to appear in federal court in San Francisco at 2 p.m. on March 9, 2010. At that time, Judge William H. Alsup will either accept of reject the plea agreement. Should the plea agreement be accepted, Trabulse will be sentenced. The maximum statutory penalty for mail fraud in violation of 18 U.S.C. Section 1341 is 20 years and a fine of $250,000, or twice the gross gain or loss, whichever is greater, plus restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. Section 3553.
Jonathan Schmidt and Thomas E. Stevens are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Ponly Tu. The prosecution is the result of a two-year investigation by the Federal Bureau of Investigation. The U.S. Attorney’s Office acknowledges the assistance of the San Francisco Regional Office of the Securities and Exchange Commission in this investigation.
Case #: CR 09-0350 WHA
A copy of this press release may be found on the U.S. Attorney's Office's Web site at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges' calendars with schedules for upcoming court hearings can be viewed on the court's Web site at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney's Office should be directed to Jack Gillund at (415) 436-6599 or by e-mail at Jack.Gillund@usdoj.gov.