Woodcliff Lake Hedge Fund Denies It Had Early Knowledge of Westgate Ponzi Scheme

April 22, 2010 – In The News
North Jersey

In a recent suit involving Westgate Capital Management LLC, an alleged Ponzi scheme, its investor Mountain Capital Management LLC has been accused of seeing signs of fraud before Westgate collapsed. Mountain Capital is claiming it had no knowledge of the Ponzi scheme. According to Ernest Badway, a former SEC enforcement lawyer, investors who suspect fraud have no legal obligation to report their suspicions.

"It may be offensive and it may be disturbing that people, when they see a crime they don't turn somebody in,'' said Badway. "But unless you have a legal obligation to turn somebody in, you can't be criticized for it."

Badway, who said he has helped clients withdraw investments from suspected frauds, added: "You may have some ideas that someone is running a Ponzi scheme, but just because you have an idea somebody is running a Ponzi scheme doesn't mean that's what they're running."

View the entire article in the April 22 issue.