IBJNews

Hauke receiver files suit against his former accounting firm

Back to TopCommentsE-mailPrintBookmark and Share

The receiver representing investors in the Ponzi scheme run by convicted money manager Keenan Hauke has sued Hauke's former accounting firm, charging that its negligence contributed to millions of dollars in investor losses.

Carmel attorney William Wendling Jr. filed suit in Marion Superior Court on Monday against Indianapolis-based DeWitt & Shrader PC and executives David DeWitt and Matthew Hickey.

The lawsuit claims the firm violated the Indiana Securities Act and committed negligence and fraud, as well as breach of contract, by failing to monitor Hauke’s bank accounts.

DeWitt & Shrader had served as the accounting firm for Hauke’s Fishers-based hedge fund, Samex Capital Partners LLC, from January 2006 until April 2011.

Wendling charges in the complaint that DeWitt & Shrader failed to monitor Samex’s bank accounts, enabling Hauke to pilfer investor funds for his personal use.

“As Samex’s accountants, defendants either knew or should have known that Hauke was not following generally accepted accounting practices and compliance procedures, and either knew or should have known that Hauke was stealing from Samex and was operating a Ponzi scheme,” Wendling said in the suit.

DeWitt said the complaint is without merit and that he plans to vigorously defend himself, the firm and Hickey.

“We are disappointed and surprised by the complaint filed by the receiver,” DeWitt said in an e-mail to IBJ. “We have cooperated fully with the investigative authorities and, in fact, the criminal investigators concluded that Keenan Hauke concealed his misconduct from us as well as his investors. We too fell victim to Keenan's schemes, as a portion of our 401(k) plan was invested with Hauke.”

Hauke pleaded guilty to fraud in December and was sentenced to 10 years in prison in March. He also was ordered to make restitution of $7.1 million, the amount the court determined he swindled from 67 investors.

In the suit, though, Wendling estimates the losses at $10 million. He is seeking to recover all investor losses attributed to DeWitt & Shrader’s negligence, according to the suit.

The complaint against DeWitt & Shrader follows a separate suit Wendling filed in April on behalf of investors.

He sued Larcher Investments LP and one of its managers, David Larcher, in federal court in Indianapolis. Larcher is executive vice president of Vestar Development, a Phoenix-based real estate developer.

The lawsuit claims Larcher deposited about $2 million into Samex through a series of payments and reinvested profits in 2002, 2004 and 2005.

Then, in 2008, Hauke wired Larcher nearly $2.6 million, describing the extra money as a gain on Larcher’s investments. Wendling claims the money Larcher received actually came out of the pockets of other investors.

The case is pending in federal court.

Before his guilty plea, Hauke was a high-profile wealth manager who made regular appearances on CNBC, Fox Business Network, Bloomberg Television and Bloomberg Radio. He also wrote an investing column for IBJ.

ADVERTISEMENT

  • Costly
    These types of allegations have enormous defense expense bills. Accounting firms should buy errors and omissions insurance

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. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

ADVERTISEMENT