Class Action

Ponzi Schemes

Latest News


Starr Austen Helped Secure Huge Recovery for Fraud Victims

Starr Austen Helped Secure Huge Recovery for Fraud Victims

In a better-than-average outcome, more than 90 investors who lost $9.7 million in a securities fraud debacle will recover a very substantial percentage of their losses. The investors had put money in a hedge fund, Samex Capital Partners, run by a Fishers, Ind., hedge fund manager Keenan Hauke. The court appointed William Wendling, Senior Partner with Campbell Kyle Proffitt in Carmel, Ind., to act as receiver. Wendling then hired Starr Austen & Miller to act as lead securities litigation counsel because of their experience in representing victims of securities fraud.

Broker misconduct

In 2012, Hauke pleaded guilty to securities fraud and was sentenced to 10 years in prison. State and federal investigators found that Hauke orchestrated a Ponzi scheme to cover up massive losses his hedge fund suffered in 2004.

He generating fake account statements for clients that showed money he didn’t have and returns he hadn’t earned.

Robust recovery of assets

Investors received $1 million in 2013, and about $2.2 million more is ready for distribution. The final hearing in Hauke’s receivership is imminent.

William Wendling, a senior partner with Campbell Kyle Proffitt in Carmel, Ind., the party serving as receiver in this case, recovered about $275,000 by selling a mortgage-free condo Hauke owned in Barbados. He also sold off other property, including gold and silver coins, thanks to an asset freeze imposed by the court. Still the money raised through selling Hauke’s assets was a relatively small percentage of the overall recovery.

But Wendling gives credit for the robust recovery to three parties: Hamilton Superior Judge Richard Campbell, who oversaw the case; personnel with the Indiana Securities Division of the Secretary of State’s Office; and attorney Scott Starr of Starr Austen & Miller, LLP, who represented the receiver in the litigation. It was Starr’s work that led directly to recovering most of the monies the investors will receive.

Last year, Starr was successful in a lawsuit in which the accounting firm DeWitt & Shrader P.C. agreed to pay $1.8 million to settle allegations it failed to monitor Hauke’s accounts and committed negligence and was jointly liable for the securities fraud. Starr also made claw-back claims against past investors who made fake profits in the Ponzi scheme.

Hauke is now an inmate at the McCreary United State Penitentiary in Pine Knot, Kentucky. His current status is a far cry from his past life when he served as an investing columnist in Indiana Business Journal and also made regular appearances on CNBC, Fox Business Network, Bloomberg Television and Bloomberg Radio.

The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.

Source: The Indiana Lawyer
News Release from the Office of the Indiana Secretary of State 5/1/15