DeWitt & Schrader Ponzi Scheme Lawsuit Announced by Starr Austen & Miller
Scott Starr of the Indiana law firm of Starr, Austen & Miller, LLP,announced today that the firm has commenced a lawsuit against the independent certified public accounting firm, and one of its principals and employees, who were involved in rendering services for the Keenan Hauke Ponzi scheme on behalf of its client, the court appointed Receiver for Samex Capital Partners, LLC. The case is entitled “William E. Wendling, Jr., as Receiver for Samex Capital Partners, LLC v. DeWitt & Schrader, P.C., David M. DeWitt, and Matthew S. Hickey,” and was filed on July 9, 2012 in Marion County.
Keenan Hauke, formerly a prominent Fishers Indiana money manager, plead guilty in federal court in December 2011 to securities fraud and was later sentenced to over 10 years in prison as a result of his crimes. Although Mr. Hauke is now behind bars, the clean up continues to try to find the approximately $10 million in investor losses which disappeared as a result of his Ponzi scheme, which was run through the limited liability company he managed, Samex Capital Partners, LLC.
As a result of the investigative efforts of the Indiana Secretary of State’s Securities Division and the filing of its action “State of Indiana et al. v. Keenan R. Hauke, et al.”, in Hamilton County Superior Court 4 under cause number 29D04-1104-PL-003478, the Receiver, William E. Wendling, Jr., was tasked with marshaling assets and litigating all claims in order to optimize the recovery for losses incurred by Samex and its members.
Starr Austen & Miller was later approved as counsel for the Receiver and is filing this case against DeWitt & Schrader, and its principal, David M. DeWitt and employee Matthew S. Hickey, alleging four causes of action. The Complaint alleges that the Defendants were the independent accounting firm and also performed Hedge Fund Operational Services for Samex during most of the course of Hauke’s Ponzi scheme. The involvement of the certified public accounting firm gave Hauke’s hedge fund an air of legitimacy, and was meant to, and did, cause investors to rely on Defendants pronouncements of the legitimacy of the operations.
While Defendants presented to investors as being well equipped for their role as accountants for, and performing Hedge Fund Operational Services for Samex, the Complaint alleges that, in fact, Defendants were ill equipped to do their responsibilities properly. Instead of independently performing their accounting and other roles as required, they provided Samex members, who were all investors in the hedge fund, with account summaries they knew or should have know were inaccurate. In fact, the complaint alleges, that the Defendants were not verifying or auditing the information stated in the accounting statements they themselves prepared, but instead were accepting the information provided to them by Hauke. In addition, it is alleged that Defendants further failed to monitor all known Samex bank accounts for fraudulent activity, thereby not identifying Hauke’s use of investor funds for personal use and to further the Ponzi scheme.
Scott Starr, a partner in the firm, explained, “The filing of this lawsuit signifies an important step in Mr. Wendling’s attempt to recover some of the money Keenan Hauke stole from members of his own community. We believe that without the involvement of DeWitt & Schrader, and its employees, in providing an air of legitimacy in this Ponzi scheme the fraud could not and would not have gone on so long. Had DeWitt & Shrader monitored all the Samex bank accounts, the fraud should have been discovered years earlier.”
Indiana Secretary of State Connie Lawson also commented on the importance of today’s filing and stated, “I applaud the work of our Securities Division team in its investigation of Keenan Hauke . Thanks to the quick action of the Securities Division in initiating this asset freeze in April of 2011, there is still an opportunity to recover investor losses,” SecretaryLawson further stated. “Our team has worked closely with Receiver Wendling and Mr. Starr, and we will continue to provide assistance in the efforts to return Hauke’s ill gotten gains to investors.”