Indiana Money Manager Pleads Guilty to $7 Million Ponzi Scheme

Indiana Money Manager Pleads Guilty to $7 Million Ponzi Scheme

A once-prominent Indiana money manager acknowledged that he operated a Ponzi scheme that defrauded investors out of at least $7 million. Keenan Hauke, 40, pled guilty to a single charge of securities fraud, which carries a maximum prison sentence of twenty-five years and a $250,000 fine. Authorities were tipped off by a former business associate of Hauke, who had formerly appeared on financial channels including CNBC, appeared in Bloomberg Markets, and penned a regular column for nine years in the Indianapolis Business Journal. According to the plea agreement between Hauke and prosecutors, the sentencing judge would be prohibited from handing down a sentence exceeding 17 years.

In 1999, Hauke formed a hedge fund, Samex Capital Partners LLC ("Samex"), in which he acted as chief executive officer. After engaging in dozens of disastrous real estate investments that sustained heavy losses, Hauke generated false account statements listing purported investments and constant returns. Hauke then split up the fund into two groups - the Brokerage Group and the Real Estate Group. The fund's legitimate operations were moved into the Brokerage Group, while the ill-performing real estate investments were allocated to the Real Estate Group. However, instead of engaging in legitimate trading, Hauke used new investor money to pay returns of principal and interest to existing investors. Hauke also misappropriated investor funds to sustain a lavish lifestyle, including the purchase of a condo in Barbados.

Earlier this year, the Indiana Securities Division filed a civil suit against Hauke accusing him of operating a Ponzi scheme, and obtained the appointment of a receiver to recover assets for the benefit of defrauded investors.  The receiver, William Wendling, says he has recovered approximately $1.6 million for the benefit of investors by seizing Hauke's bank accounts and selling possessions including gold and silver coins. Additionally, Hauke's Barbados condo may yield up to $400,000 at an upcoming sale.  

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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