HEDGE FUND MANAGER CHARGED FOR DEFRAUDING INVESTORS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
SEC Charges Hedge Fund Manager for Defrauding Investors

On April 4, 2014, the Securities and Exchange Commission filed suit in United States District Court in Dallas, Texas, alleging that, from October 2009 to June 2012, Matthew D. Sample of San Diego, California raised almost $1 million from five investors based on representations that he would use their money to trade on the investors’ behalf. Instead, the Commission alleges that he fraudulently diverted approximately one-third of the money for his personal use and to make payments to other investors.

The Commission's complaint alleges that Sample raised the money from investors based in New Mexico and elsewhere through his hedge fund, The Lobo Volatility Fund, LLC. Sample told investors he would take a monthly management fee of 1/12 of 1% of Lobo’s net asset value, 20% of trading profits and only limited expenses. But almost immediately after receiving investor funds, Sample diverted significant sums to his personal accounts, credit card payments, retail purchases, meals, and entertainment. The complaint further alleges that when Sample’s trading strategy failed, resulting in the loss of all remaining investor funds, he provided investors with false documents making it look like his trading had been successful. He also used at least $50,000 from a new investor to make a partial payment to an investing couple who had demanded a refund.

The Commission charges Sample with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940. Without admitting or denying the allegations in the complaint, Sample has consented to permanent injunctions against violations of these provisions and from directly or indirectly soliciting or accepting funds from any person or entity for any unregistered offering of securities. The Commission has asked the district court to order Sample to pay disgorgement of ill-gotten gains with prejudgment interest and to impose civil penalties.

This matter was investigated by Ty Martinez, under the supervision of Jonathan P. Scott, both of the Fort Worth Regional Office. Bret Helmer will lead the litigation.

U.S. MARSHALS ANNOUNCE RECOVERY OF 2 ABDUCTED CHILDREN IN MEXICO

FROM: U.S. MARSHALS SERVIE

TUCSON, Ariz. – U.S. Marshals Service investigators along with detectives with the Pima County Sheriff’s Department worked with law enforcement in Mexico to recover two girls, ages 1 and 2, Thursday in Hermosillo, Sonora, Mexico, who had been abducted by their non-custodial parents.

This investigation stems from suspicious circumstances that surround an investigation involving Child Protective Services in Pima County due to injuries sustained by one of the girls. It is alleged that in November 2012 Luis Fernando Palacio, 26, fled to Sonora, Mexico, with his 2-year-old daughter after being ordered to return the child to the mother. In January, Danielle Nicole Lovemore, 22, allegedly kidnapped her 1-year-old daughter, who was in CPS custody.

Based on the Marana Police Department investigation into this incident, a felony arrest warrant was issued on Lovemore, charging her with custodial interference. It was believed Lovemore fled to Mexico in an attempt to reunite with Palacios. At that time, assistance from the U.S. Marshals Service was requested. U.S. Marshals Service investigators began to work around the clock with Mexican law enforcement to locate Lovemore in an attempt to recover the missing children.

Lovemore and the two children were located Thursday at a residence in Hermosillo after being tracked there by Mexican law enforcement. The U.S. State Department’s American Citizens Services are currently caring for the children pending their safe return to the United States. Lovemore was deported to the U.S. Thursday night through the Nogales Port of Entry where Deputy U.S. Marshals took her into custody and transported her to the Pima County Jail.

"International child abduction cases are the most difficult to execute due to conflicting parental agendas and international jurisdictions," said U.S. Marshal for the District of Arizona David Gonzales. "The quick and safe return of these two children was paramount to all of the American and Mexican agencies that worked diligently on this case. Child abduction cases continue to rise and have increased nearly 70 percent since 2009. This increase is primarily attributed to more international couples."