University Times

One of a pair of investment fund managers accused of misappropriating funds invested by institutional clients, including nearly $70 million in Pitt’s endowment funds, has pleaded guilty.

Paul Greenwood, a former principal of WG Trading Co. and WG Trading Investors, and his partner Stephen Walsh were arrested in 2009 and indicted on six charges: conspiracy, securities fraud, commodities fraud, two counts of wire fraud, and money laundering. (See March 5, 2009, University Times.) The federal charges stemmed from a fraudulent commodities trading and investment advisory scheme involving millions of dollars invested by the University and other institutional clients.

The University’s FY09 financial statement reported the value of its investment as $34.9 million, representing a 50 percent write-down from previously recorded fair value. (See Oct. 29, 2009, University Times.)

According to the U.S. Attorney for the Southern District of New York, the indictment, court documents and statements at the plea proceeding indicate that Greenwood and others ran a fraudulent commodities trading and investment scheme dating back to at least 1996.

Through a marketer, Greenwood and others solicited $7.6 billion from investors but misappropriated at least $331 million of the funds entrusted to them to fund extravagant lifestyles.

According to the U.S. Attorney, Greenwood used some of the misappropriated funds to build a home, buy expensive collectibles and operate a horse farm.

Greenwood and Walsh were arrested in February 2009 and both entered pleas of not guilty in July 2009. Greenwood changed his plea from not guilty to guilty July 30 in federal court in New York. His sentencing is tentatively scheduled for Dec. 1.

Walsh has not changed his not guilty plea. The charges against him still are pending.

—Kimberly K. Barlow