Ex-trader admits fraud in Ponzi loan scheme

A former bond trader and hedge fund manager pleaded guilty to fraud charges in connection with an alleged loan-based Ponzi scheme.

The U.S. attorney’s office for the Southern District of New York alleged that Jeffrey Soberman Parket, who previously ran several hedge funds, admitted to charges of wire fraud and bank fraud for allegedly falsifying assets, bank and brokerage statements, and forging other documents to secure over US$65 million in loans from both individuals and financial institutions.

“Claiming that he needed short-term liquidity for investment opportunities or real estate purchases, Parket constructed elaborate stories and submitted hundreds of pages of supporting documents to obtain loans he had no intention of repaying,” U.S. authorities alleged.

Some of the falsified loans were used to pay back earlier loans, which enabled the scheme to run over several years, ultimately resulting in US$37 million in losses to victims, that included a bank, an insurer, a bridge financing firm, and a real estate services company, among others.

“Parket traded on his reputation as a respected financier and fabricated paper assets to defraud lenders of millions of dollars in loans that they never would have made if not for his lies and the sophisticated ruses he used to support those lies,” said Damian Williams, U.S. attorney for the SDNY, in a release.

“His scheme cost some of his victims everything they had. He will now be held accountable for his deceit,” Williams added.

Parket is due to be sentenced on June 28.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.