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December 5, 2013

More money from Ponzi scheme released

Another $2.8 million in University endowment funds that were lost in a Ponzi scheme is being returned to the University.

A federal judge in New York on Nov. 19 approved a receiver’s request to distribute to investors $50 million in recovered funds that had been invested in funds operated by Stephen Walsh and Paul Greenwood. The University expects to receive its share in the next week, according to Pitt officials.

Greenwood and Walsh, who operated Westridge Capital Management, WG Trading Investors and other related firms, were charged in 2009 with operating a $1.3 billion scheme that misappropriated money from Pitt and other institutional clients. Greenwood pleaded guilty to securities fraud and related charges in July 2010 and is awaiting sentencing; Walsh has pleaded not guilty.

According to the U.S. Securities and Exchange Commission (SEC), Greenwood and Walsh “essentially treated their clients’ investments as their personal piggy bank to purchase multi-million dollar homes, a horse farm and horses, luxury cars and rare collectibles such as Steiff teddy bears.”

Following the fraud complaints by the SEC and the Commodity Futures Trading Commission, the assets of Greenwood, Walsh and their entities were frozen.

The court-appointed receiver, California-based Robb Evans & Associates, has been liquidating recovered assets. The recently approved distribution will bring the total amount returned to investors to approximately 94.3 percent of their net principal investments, court documents stated.

Ken Service, Pitt’s vice chancellor for University communications, said that Pitt’s distributions from the receivership estate total approximately $49.4 million. “The receiver continues to liquidate assets, and there may be additional future distributions,” Service told the University Times.

The University received $44.4 million in 2011 (see April 28, 2011, University Times) and $2.18 million in 2012 (see March 22, 2012, University Times) in previous court-ordered distributions.

—Kimberly K. Barlow

Filed under: Feature,Volume 46 Issue 8

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