Ex-investment manager Hauke gets 10 years for fraud

Back to TopCommentsE-mailPrintBookmark and Share

Former Fishers investment manager Keenan Hauke was sentenced Friday to 10 years in federal prison for securities fraud.

Hauke admitted masking huge losses in a hedge fund he operated that resulted in dozens of investors losing more than $7 million. He was ordered to make $7.1 million in restitution.

Hauke, 41, agreed to plead guilty in December to one count of securities fraud, a charge that carried a maximum penalty of 25 years in prison. The plea agreement prevented the government from recommending a prison sentence of more than 17 years.

Appearing before federal judge Tanya Walton Pratt in an Indianapolis courtroom Friday morning, Hauke testified that he was willing "to spend the rest of my life living with nothing but necessities until restitution is complete."

Pratt said Hauke would begin serving his sentence immediately at the federal correctional institution in Terre Haute.

IBJ reported in August that Hauke’s hedge fund had invested millions of dollars into Michigan real estate eight years ago without telling clients and that the holdings ended up nearly worthless. Rather than fess up, he created fake account statements for clients and used money from new investors to pay off earlier ones.

Victim Amy Edmonds said Friday morning that she and her husband entrusted Hauke with his 401(k) fund along with an inheritance she received from her father. She told the judge they were next-door neighbors of the Hauke family for 10 years and trusted him with their money.

“We thought we were friends; we were wrong,” she said. “We feel stupid, hurt and violated.”

Hauke’s attorney had maintained that Robert Beasley, another hedge fund manager whose firm had provided back-office administration for Hauke’s fund, had made the losing real estate investments without Hauke's knowledge or approval.

But court papers filed by prosecutors in December said that that while “initially, the real estate transaction was initiated by [Beasley’s firm] ... Hauke ultimately approved the real estate investment made by the hedge fund.”

Prosecutors said he shifted assets among accounts to obscure his wrongdoing. After suffering the real estate losses, Hauke separated clients into the “Brokerage Group” and the “Real Estate Group.” He consolidated all the hedge fund’s legitimate investments into the Brokerage Group, while the Real Estate Group got the disastrous Michigan investments.

The Securities Division of the Secretary of State’s Office began investigating Hauke early last year after a co-worker, Scott Noble, notified the state about irregularities he said he had discovered. The FBI soon joined the probe.

“Mr. Hauke's guilty plea and [Friday's] sentencing close a chapter in my life that began last year,” Noble said in an e-mailed statement. “Thank you, to the Dept. of Justice and the Indiana Securities Division for bringing swift justice to a criminal that has caused many people a lot of stress.”

Hauke’s lawyer, Juval O. Scott, argued in court filings before the sentencing for a more lenient prison term, maintaining that the amount of investor money Hauke took for his personal use totaled less than $1 million.

That included $377,000 for a condominium in Barbados, $150,000 to the Internal Revenue Service, $120,000 to pay off a mortgage on his residence and $41,000 to purchase a Toyota minivan and Prius.

Since he did not live a lavish lifestyle, Scott argued in the documents, more than $2 million was recovered by a court-appointed receiver trying to marshal assets and reduce investor losses.

“Considering the type of crime committed, Mr. Hauke’s lack of criminal history, and Mr. Hauke’s genuine remorse, any term of incarceration coupled with the shame and embarrassment that has already been suffered is significant,” she wrote. “The likelihood that Mr. Hauke will return to crime is virtually nonexistent, which signifies that a sentence well below the suggested range is warranted.”

Hauke gained credibility with investors by keeping a high profile in the media with appearances on CNBC, Fox Business Network, Bloomberg Television and Bloomberg Radio. He wrote a regular investing column for IBJ for nine years. The newspaper discontinued the column when the fraud investigation began.

Hauke was only 29 in 1999 when he incorporated Samex Capital Partners, the state’s first hedge fund. He previously was a stockbroker and trader, first in New York and then in Florida.



  • 50 Year Perspective
    Vernon Presley, Elvis Presley's father, did 3 years in a Mississippi penitentiary for a $36 dollar check fraud conviction in 1938. Yes, Thirty Six Dollars. This man stole much much more.

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.