By Terry Baynes
(Reuters) - A New York fund manager was arrested on Monday on charges of orchestrating a Ponzi scheme and stealing around $2 million from three hedge fund investors, U.S. authorities said.
Federal prosecutors charged Jason Konior, 39, with defrauding investors by promising to match their investments in his fund, Absolute Fund LP, many times over.
Prosecutors said he used $2 million of the money he collected from three hedge funds to pay his own expenses and to cover redemption requests from prior investors, according to the criminal complaint dated February 7.
Konior's lawyer Douglas Jensen of the law firm Park & Jensen LLP had no comment on the case when contacted by Reuters.
Konior advertised that his fund provided trading leverage to new and emerging hedge funds, according to prosecutors. He said he would match the hedge funds' investment by up to nine times and put the money into brokerage accounts that investors could use to trade securities, the complaint said.
If an account lost money, the hedge fund investor would bear the losses, until its contribution ran out. If the account earned profits, they would be split between the individual investor and Absolute.
In emails, text messages and phone conversations, Konior said he was establishing brokerage accounts for the three hedge fund investors when he had already stolen their money, the U.S. Attorney's Office for the Southern District of New York said in a statement.
Prosecutors charged Konior with securities fraud and wire fraud, each of which carries a potential penalty of up to 20 years in prison.
Konior is expected to be presented in Manhattan federal court before U.S. Magistrate Judge James Cott on Wednesday, the U.S. Attorney's Office said.
Last May, the Securities and Exchange Commission brought similar allegations against Konior.
The criminal case is USA v. Konior, U.S. District Court for the Southern District of New York, No. 13-mag-369.
(Reporting By Terry Baynes in New York; Additional reporting by Sakthi Prasad; Editing by Edmund Klamann)