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Investment adviser Hauke agrees to plead guilty in $7M fraud

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Former Fishers investment manager Keenan Hauke has agreed to plead guilty to one count of securities fraud, a charge that carries a maximum penalty of 25 years in prison.

Federal prosecutors on Tuesday afternoon charged Hauke with masking huge losses in his hedge fund for years as part of a scheme that ultimately resulted in 67 investors losing more than $7 million.

Immediately after filing the criminal information in U.S. District Court in Indianapolis, the U.S. Attorney’s Office submitted a plea agreement signed by Hauke in which he admitted guilt. The plea agreement, which requires court approval, would prevent the government from recommending a prison sentence of more than 17 years.

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

In an investigative story in August, IBJ reported that Hauke’s hedge fund had invested millions of dollars into Michigan real estate seven 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.

In court papers, prosecutors alleged that Hauke diverted some investor funds for personal use, including paying off the mortgage on his home.

Hauke, who is in his early 40s, wrote a regular investing column for IBJ for nine years. The newspaper discontinued the column when the investigation  began.
 

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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