FEDS HIT LANCER'S COWEN WITH MORE CHARGES
By CHRISTOPHER BYRON
May 28, 2003 -- The Lancer Group of hedge funds faced another setback when federal prosecutors in Miami filed an expanded criminal indictment against Bruce D. Cowen, identified in government papers as a Lancer managing director.
Michael Lauer, Lancer's founder, has denied that Cowen has ever been more than a consultant to the group.
Cowen and two others are facing securities fraud charges in connection with an alleged kickback scheme involving an undercover FBI agent in a stock swindle and shares in a penny stock called Lighthouse Fast Ferry, Inc.
A trial in the case had been scheduled for next week in Miami, but has now been pushed back to September, as prosecutors broaden their case.
In the new filing, known as a "superseding indictment," filed last week, prosecutors are focusing on the role the Lancer Group may have played in Cowen's activities.
The Lancer Group is identified as an "Investment Group" in the new indictment. But there is little doubt the entity, described as a New York group of hedge funds, refers to the Lancer Group, which claimed roughly $1 billion of assets under management last autumn.
The Lancer Group has been reeling from shareholder redemptions and lawsuits, along with a bankruptcy proceeding in Connecticut and a forced liquidation effort by regulators in the British Virgin Islands. Lancer and Lauer are suing The New York Post for its coverage of the case.
Not only was Lancer the only hedge fund Securities and Exchange Commission filings show to have held shares in the company, but the government's own press release announcing Cowen's arrest has already identified him as a Lancer managing director.
The new indictment reveals that the feds are now looking at the possibility that Cowen may have been illegally propping up the value of at least one shaky penny stock in Lancer's own portfolios.
Cowen and two co-defendants are charged with conspiring to pay a $900,000 kickback to the undercover FBI agent, to induce him to purchase $5 million worth of Lancer-controlled Lighthouse Fast Ferry, Inc. at $1.60 per share.
The superseding indictment now asserts that, beginning in April 2001, Cowen and the other defendants began a program of aggressive, end-of-month purchases of Lighthouse Fast Ferry stock on behalf of Lancer through two different brokerage firms, thereby lifting the price of the stock from 90 cents per share in April 2001, to a year-end high of $2.15.
According to the indictment, this misled Lancer's own investors, who received regular monthly reports on the value of their holdings, into believing their hedge fund shares were worth more than they really were.
A phone call requesting comment from the Lancer Group was not returned. |
