IBJNews

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.


 

ADVERTISEMENT

  • 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

COMMENTS POLICY
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
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Uh, sorry Johnnie, but you are incorrect. Despite the assertions by yourself and various defenders and captains, sports attendance is NOT off significantly at most sporting events in the US. Variances in attendance has been in the range of single digits, both + & - for years now. MLB has had most of its best overall attendance nubers in the last decade, and that trend has been consistent for most major sporting events. The number one issue cited by most fans when asked about attendance is the overall cost of attending. The presence of HD and big screen televisions in home doesn't even register, as a factor for not attending an event. VALUE in the product is the key, and apparently is something lacking in the current ICS. What other explanation is there when with what is routinely touted as the "best" racing on the planet, fans are staying away in DROVES. A "close" title battle into the last event at Fontana, with the "cars and stars" of the ICS, and who showed up? MAYBE 8K. Sorry, but HD TV isn't to blame for that kind of fan apathy.

  2. Do you need finance to establish your business ? Are you interested in getting a loan at 3% from our private company? If so please Email: suntrust_oil@blumail.org

  3. If she was worth the $ the public outcry over direct tv dropping them would have kept them on their dishes as we have seen with other companies. I too quit watching channel 13 after she showed up since I left channel 8 because of her all show rather than production results. When Randy on 8 corrected her she had a big head and incorrectly challenged his correction for pronunciation of a city. Other antics while she matures was too much for me with her very inaccurate forecasts. All the forecasters were predicting rain until Thursday except Chris. They predicted sunny on Thursday but instead of rain until Thursday upon which the sun would finally make it out in full glory Chris was right on the money just as I too predicted looking at the radar on weather.gov. One thing I love about Angela is the fear you can see in her every time it thunders in the winter. It far exceeds the entertainment value of her body language (high heel noise drags, depression, etc) when her forecasts are so incorrect. Her hair stands on end, you have to see it!!!

  4. Good Day, Apply For A Loan I am Mr Fernadez Antonio, a private Loan lender and a cooperate financial for real estate and any kinds of business financing. I also offer Loans to individuals, Firms and cooperate bodies at 3% interest rate We offer any kind of loans. email us via fernadezloaninvest@outlook.com LOAN APPLICATION FORM First name:......................... Middle name:......................... Last name:........................................ Date of birth (yyyy-mm-dd):....................... Gender:........................................... Marital status:................................... Total Amount Needed............................... Loan Duration.................................... Address:.......................................... City:............................................. State/province:................................... Zip/postal code:.................................. Country:.......................................... Phone:............................................ Fax:.............................................. Mobile/cellular:.................................. Monthly Income.................................... Occupation:....................................... Best Regard, Mr Fernadez Antonio.

  5. i will love to share my testimony to you all the people in world i got married to my husband about 2 year ago we start having problems at home like we stop sleeping on the same bed,fighting about little things he always comes home late at night,drinking too much and sleeping with other women out side i have never love any man in my life except him. he is the father of my child and i don't want to loose him because we have worked so hard together to become what we are and have today .few month ago he now decided to live me and the kid,being a single mother can be hard sometimes and so i have nobody to turn to and i was heart broken.i called my mom and explain every thing to her,my mother told me about DR.okoro how he helped her solve the problem between her and my dad i was surprise about it because they have been without each other for three and a half years and it was like a miracle how they came back to each other. i was directed to DR. okoro on his email:okorospell@gmail.com and explain everything to him,so he promise me not to worry that he will cast a spell and make things come back to how we where so much in love again and that it was another female spirit that was controlling my husband he told me that my problem will be solved within two days if i believe i said OK So he cast a spell for me and after two days my love came back asking me to forgive him i Am so happy now. so that why i decided to share my experience with every body that have such problem contact Dr okoro the great spell caster on his email addresses spellcasterforlove@outlook.com

ADVERTISEMENT