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Date: 07-22-2021
Case Style:
Case Number: 1:19-cr-00893-LAK
Judge: Lewis A. Kaplan
Court: United States District Court for the Southern District of New York (New York County)
Plaintiff's Attorney: United States Attorney’s Office
Defendant's Attorney:
Description: New York City, New York criminal defense lawyer represented Defendant charged with securities fraud and misappropriation scheme.
DONALD LAGUARDIA was indicted for committing securities fraud and for misappropriation scheme. LAGUARDIA was the chief executive and co-founder of a New York-based investment firm, L-R Managers, LLC, which managed the LR Global Frontier Master Fund and two related feeder funds (collectively, the “Frontier Funds”). LAGUARDIA was found guilty of securities fraud, investment adviser fraud, and wire fraud following a trial last November before United States District Judge Lewis A. Kaplan.
U.S. Attorney Audrey Strauss said: “Donald LaGuardia pitched his clients on frontier market investments, but the Frontier Funds turned out to be a front for fraud. LaGuardia betrayed his clients’ trust by diverting millions to other uses, including his own personal and business expenses. Now LaGuardia has been sentenced to prison for his crimes.”
According to statements in the Indictment, evidence presented during the trial, and other filings and statements at public court proceedings in the case:
From in or about 2013 through in or about 2017, LAGUARDIA solicited approximately $6.4 million from investors for Frontier Funds, which had a stated focus on investments in “frontier” markets in Latin America, Central and Eastern Europe, the Middle East, Africa, and Asia. Contrary to LAGUARDIA’s representations, and in breach of his duties to investors in the Frontier Funds, LAGUARDIA misappropriated investors’ money to finance L-R Managers’ payroll, pay rent for its office space on Park Avenue in Manhattan, and pay hundreds of thousands of dollars in charges on the firm’s credit card, among other unauthorized expenses. Hundreds of thousands of dollars went to the benefit of LAGUARDIA personally.
In one example, in 2013, LAGUARDIA solicited an $800,000 investment in the Frontier Funds from an investor (“Investor-1”). Upon receipt of Investor-1’s money, an L-R Managers employee sent an email to LAGUARDIA and another person asking for approval to forward the $800,000 to the Frontier Funds. LAGUARDIA responded, “Dont [sic] wire anything yet!” LAGUARDIA then caused approximately $390,000 of Investor-1’s investment never to be transmitted to the Frontier Funds, but instead to be used to pay himself approximately $52,000 and for various other personal and business expenses.
By September 2015, L-R Managers faced substantial financial difficulties. On September 1, 2015, an L-R Managers principal sent an email to LAGUARDIA and others at the firm stating that it would be “ethically troubling to accept money into the [Frontier Funds] when [L-R Managers] can no longer support . . . payroll and mission critical services.” Nevertheless, just a few days later, a new investor solicited by LAGUARDIA (“Investor-2”) made a $2 million investment into the Frontier Funds. Prior to this investment, LAGUARDIA concealed his firm’s near insolvency from Investor-2 and did not disclose that the Frontier Funds had been paying substantial expenses for L-R Managers, contrary to the representations in the funds’ offering documents. LAGUARDIA then proceeded, over the course of several months, to use a substantial portion of Investor-2’s investment in the Frontier Funds to continue paying himself and subsidizing his firm’s business expenses.
* * *
LAGUARDIA, 54, of Lavallette, New Jersey, was also sentenced to three years of supervised release. He was further ordered to forfeit $2,571,500 and pay restitution to victims in the amount of $4,039,872.46.
Ms. Strauss praised the investigative work of the U.S. Postal Inspection Service and thanked the U.S. Securities and Exchange Commission for its assistance.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Margaret Graham and Daniel Loss are in charge of the prosecution.
15:78J.F MANIPULATIVE AND DECEPTIVE DEVICES (SECURITIES FRAUD)
(1)
15:80A.F AFFILIATIONS OR INTEREST OF DIRECTORS, OFFICERS (INVESTMENT ADVISER FRAUD)
(2)
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
(3)
Outcome: Sentencing Letter by Donald LaGuardia addressed to Judge Lewis A. Kaplan from Eric M. Creizman, attaching letter of Gavin Wilson dated July 20, 2021 re: Letter from Gavin Wilson in Support of Donald LaGuardia at sentencing. (Attachments: # 1 Letter from Gavin Wilson to Hon. Lewis A. Kaplan, dated July 19, 2021)(Creizman, Eric) (Entered: 07/20/2021)
Defendant was sentenced to 5 years in prison.
Plaintiff's Experts:
Defendant's Experts:
Comments: