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Friday
Jul262013

Lawsuit Accuses Cincinnati Money Manager of Massive Ponzi Scheme

A Cincinnati money manager who once claimed to have more than $200 million in assets under management is now the target of a lawsuit charging that he masterminded an elaborate Ponzi scheme that caused "tens if not hundreds of millions of dollars" in losses.  Glen Galemmo, of Hamilton County, Ohio, was sued by dozens of former investors after they received an email last week from Galemmo stating that his funds were shutting down and directing all further inquiries to an IRS agent.  The suit, which also alleges Galemmo may have fled the jurisdiction, also names Galemmo's wife, the investment funds operated by Galemmo, and an accounting firm employed by Galemmo.  

Galemmo operated Queen City Investment Fund ("Queen City"), along with a dozen other investment entities.  In a 2001 newspaper article touting his successes, Galemmo claimed that he focused on identifying "severely-undervalued" stocks that were poised for a potential runup.  Likening the strategy to a search for "diamonds in the rough that can soar," investors were told of hefty profits.  Indeed, from 2006 to 2011, Galemmo and his funds claimed a 432% increase - including a 9.84% increase in 2008 when the S&P 500 index was down nearly 39%.  At Queen City's peak, Galemmo claimed that he had total assets under management of $200 million.  Based on these figures, Galemmo would have collected over $60 million in management fees.

However, according to the investors' lawsuit, Galemmo was not a prodigy with a knack for picking severely-undervalued stocks; rather, Galemmo used fund inflows to pay returns to existing investors in classic Ponzi scheme fashion.  Despite collecting over $60 million in management fees based on the claimed assets under management, the lawsuit alleged that Galemmo had run out of money and could not even satisfy minor tax bills.  In a July 17, 2013 email to investors, Galemmo announced that the fund would no longer be in existence, and that the office would be closed.  Investors were directed to an IRS Special Agent, and informed that Galemmo's legal counsel had instructed him to make no further comments. 

The lawsuit seeks a temporary restraining order freezing Galemmo's assets, alleging that Galemmo has fled the jurisdiction and had recently traveled to overseas countries - possibly to conceal investor funds.  

A copy of the lawsuit is here.

A copy of the July 17, 2013 email is here.  

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    Lawsuit Accuses Cincinnati Money Manager of Massive Ponzi Scheme - Ponzitracker - Ponzitracker

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