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Weston Hedge Fund Exec Gets Prison Time For $46M Fraud Scheme

U.S. Attorney Deirdre Daly.
U.S. Attorney Deirdre Daly. Photo Credit: File

WESTON, Conn. -- A 63-year-old Weston resident who is a former managing partner and principal of a Ridgefield-based hedge fund was sentenced Wednesday to 30 months in prison for engaging in a scheme to deceive investors to obtain and maintain investments, according to U.S. Attorney Deirdre Daly.

Bart Gutekunst was also sentenced to three years of supervised release by Chief U.S. District Judge Janet C. Hall in New Haven.

According to court documents and statements made in court, in November 2007, New Stream Capital launched new feeder funds, one based in the United States and a series of funds based in the Cayman Islands. New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund.

Rather than transfer into the new structure, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008. At risk of losing their largest investor, Gutenkunst, co-managing partner David Bryson, and chief financial officer Richard Pereira set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption.

As part of the scheme, the three had New Stream staff secretly execute documents to put into force the Bermuda Fund’s special priority. New Stream failed to inform investors who had transferred from the Bermuda Fund into the Cayman Fund that the Bermuda Fund was remaining open or that it was being given priority over the Cayman Fund.

Moreover, New Stream continued to market to investors by concealing from them the magnitude of the actual pending redemptions and by using deceptive marketing materials that failed to disclose the existence of New Stream’s Bermuda Fund. Through this scheme, New Stream investors were defrauded out of more than $46 million.

From April 2008 to December 2010, Gutenkunst and Bryson each collected more than $5 million in management fees and profit sharing while participating in this fraud scheme. On May 21, 2014, Gutenkunst, Bryson and Pereira each pleaded guilty to one count of conspiracy to commit wire fraud.

Co-managing partner David Bryson of Ridgefield was sentenced on Tuesday , May 5, to 33 months in federal prison. Pereira is scheduled to be sentenced Thursday.

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