A federal judge in Denver has ordered a Tennessee money manager – accused of fraud by federal regulators – to pay $1 million to an Evergreen- based hedge fund.
U.S. District Judge Richard Matsch last week awarded triple damages to the Cascade Fund, a small hedge fund that lost $320,000 of a $1 million investment it put under the management of Jon E. Hankins of Knoxville, Tenn.
Cascade sued Hankins in June, claiming he misled the fund about the performance of his other investments.
Cascade said Hankins lost its money by betting against Google’s stock in April and May and covered up the losses. Hankins sold Google shares short – a way of profiting if a stock’s value declines. But the shares rose more than 50 percent during the two months.
“This is vindication of what we said in the complaint, that Hankins defrauded our client,” said Cascade attorney Doug Tumminello of Rothgerber Johnson & Lyons. “Now it’s a matter of collecting the money.”
The Securities and Exchange Commission sued Hankins in New York in June, accusing him of fraud in the loss of almost $20 million of a total of $35 million invested in his hedge funds by about 25 investors between April 2004 and last June.
The SEC said Hankins lured investors with fraudulent claims of performance and that he later tried to cover up his losses.
Hankins has denied the allegations in court filings. Neither he nor his attorney could be reached for comment Tuesday.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
