There’s one born every minute…

September 26, 2007

images4.jpegA short time ago, the SEC issued this release charging a San Francisco hedge fund manager with defrauding investors. According to the litigation release, Alexander James Trabulse, who ran the Fahey Fund, inflated the fund’s returns by over 200%. The complaint also charges that Trabulse used investor’s money to purchase cars, home theater equipment, real estate and a European shopping spree for his now ex-wife.

The fund had over 100 investors and had raised about $10 million — pocket change, as far as hedge funds go, but not an insignificant chunk of change. But you have to wonder why none of those 100 people — or the people who were advising them — bothered to check out the fund’s website. Seriously! I’ve seen web pages designed by grade schoolers that look more professional than that. And the fact that the site contains some promo for a European musical tour that took place two years ago? Couldn’t they have found someone on Craigslist to update their site and make it look a bit more professional?

Sure, a fancy website can easily mask a fraud and a simple website — like Berkshire Hathaway’s — isn’t always a negative indicator. But the Fawley Fund site really makes me wonder about how gullible some investors really are.

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