(Bloomberg) -- The co-founder of a Connecticut hedge fund firm pleaded guilty to charges that he defrauded investors of almost $20 million in a Ponzi-like scheme, prosecutors said.
Jason Rhodes of Sentinel Growth Fund Management LLC was facing conspiracy and fraud charges in Manhattan federal court. Last month, prosecutors filed a new indictment in the case adding more allegations. Trial was scheduled to begin next week.
Rhodes, 47, of Rowayton, Connecticut, is scheduled to be sentenced on April 6, according a statement by Manhattan U.S. Attorney Geoffrey Berman.
According to prosecutors, Rhodes and his co-conspirators raised funds from about two dozen investors from 2013 to 2016, telling them their money would be invested in the market.
But the money was diverted to a variety of personal uses, including a $1 million payment to settle an unrelated civil lawsuit, a trip to Dubai, a luxury time-share and a trucking company Rhodes co-owned with his wife. Some of the funds were also used to repay $4.2 million to an investor who discovered his money had not been invested.
A lawyer for Rhodes could not immediately be reached for comment. Rhodes had initially sought to challenge the case against him by claiming his due-process rights were being violated by collaboration between prosecutors and the U.S. Securities and Exchange Commission. The judge rejected his request to seek evidence to support his theory.
Another Sentinel co-founder, Mark Varacchi, previously pleaded guilty to fraud and agreed to cooperate with prosecutors.
The charges against Rhodes carry maximum penalties of between five and 20 years in prison.
(Updates with details of the case)
To contact the reporter on this story: Christian Berthelsen in New York at firstname.lastname@example.org
To contact the editors responsible for this story: David Glovin at email@example.com, Anthony Lin
For more articles like this, please visit us at bloomberg.com
©2020 Bloomberg L.P.