June 14, 2017

New York announced a lawsuit against Dean Mustaphalli and several of the entities he controls for allegedly engaging in a six-year scheme to defraud New Yorkers—many of whom were elderly and at or near retirement—out of millions of dollars of their savings. The suit alleges that Mustaphalli caused his clients to invest in his hedge fund where he engaged in a highly speculative and risky trading strategy— against their interest and without their knowledge. The complaint alleges that Mustaphalli knew that his trading strategy for the hedge fund was unsuitable for his clients, who were interested in more conservative investments, and that this caused his clients to suffer devastating losses. The Attorney General alleges that since 2011, Mustaphalli caused 58 New York investors to invest a total of more than $11 million in his hedge fund, $10 million of which was lost by engaging in a highly risky trading strategy that was not consistent with his clients’ investment profiles and objectives. In addition, the Attorney General alleges that Mustaphalli took an additional $100,000 from his hedge fund to pay for his own personal expenses. While the investigation of Mustaphalli was ongoing, Attorney General Schneiderman sought and obtained two orders from New York Supreme Court freezing accounts of Mustaphalli’s entities and prohibiting them and Mustaphalli from offering investment advice in New York. NY

Tagged in: Securities Fraud,