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Accounting Firm Agrees to Settlement in Ponzi Fraud Case

Accounting Firm Agrees to Settlement in Ponzi Fraud Case

Indianapolis-based accounting firm DeWitt & Shrader PC agreed to settle a lawsuit brought by a receiver appointed for Samex Capital Partners, LLC involving the way it provided services for convicted Ponzi schemer Keenan Hauke.

The suit alleged that DeWitt & Shrader violated the Indiana Securities Act and committed negligence and fraud, as well as breach of contract, by failing to monitor Hauke’s bank accounts.

A prominent money manager, Hauke led the hedge fund Samex Capital Partners LLC. In December 2011, Hauke was sentenced to 10 years in prison for securities fraud and ordered to pay $7.1 million in restitution.

Hauke concealed losses, estimated at more than $9 million, in the hedge fund he operated, resulting in as many as 100 investors losing millions of dollars.

Indiana Secretary of State Connie Lawson said that as the fund’s accountants, DeWitt & Shrader had a responsibility to the investors to check Hauke’s work before issuing client account and tax statements. She added that companies in the position of the accounting firm cannot turn a blind eye if they see securities fraud, and that DeWitt & Shrader had an obligation to take action, but didn’t.

Lawson said that funds secured from the settlement will go toward repaying Hauke’s victims. She noted that to date, more than $1 million have been returned to 97 investors.

“These results were achieved through the efforts of our firm as counsel for the receiver;” according to Scott Starr, securities lawyer at Starr Austen & Miller, “due to the terms of the settlement agreement, all we can say is that the case was settled for a mutually agreeable sum.”

The team of investment fraud lawyers at Starr Austen & Miller LLP handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence, broker churning, breach of trust, as well as investor advisor malpractice.