NEW YORK — The owners of an investment firm that managed hundreds of millions of dollars for universities and charities were arrested Wednesday by the FBI in the latest white-collar scandal to rock Wall Street.
Paul Greenwood, also a horse breeder and elected official in suburban New York, and Stephen Walsh were awaiting an appearance in federal court in Manhattan to face securities and wire fraud charges alleging they raided funds of $1.3 billion to buy horses and cover other personal expenses. The names of their attorneys were not immediately available.
Court papers identified Greenwood and Walsh as the owners of Greenwich, Conn.-based WG Trading Company LP and of Westridge Capital Management Inc., based in Santa Barbara, Calif. Their operation also had offices in Manhattan and Jersey City, N.J.
The firms’ clients included “charitable and university foundations, retirement and pension plans and other institutions,” a criminal complaint said.
The complaint alleges that since the summer of 2007, the illegal wire transfers were made to bank accounts held by Greenwood and Walsh’s wife.
It also cites an interview with an unidentified WG Trading employee who described being instructed to transfer funds to personal bank accounts.
The employee claimed the money was used for “the purchase of expensive collectible items by Greenwood, the purchase of horses by Greenwood, transfer of cash to Walsh’s then-wife and … the purchase of an apartment for Walsh’s ex-wife pursuant to a divorce settlement.”
The arrests add to a growing list of white-collar defendants facing charges in U.S. District Court in Manhattan, topped by the case of Bernard Madoff, who has pleaded not guilty to masterminding a $50 billion Ponzi scheme.
Other cases include that of Florida hedge-fund manager Arthur Nadel, accused of bilking investors of up to $350 million.
