3 Years In Prison For Middletown Man Who Ran Hedge Fund Scam

MIDDLETOWN, NJ — A Middletown man well known in the area for running a multi-million hedge fund scheme that lost money for nearly 80 clients was sentenced to 36 months in prison Wednesday, the New Jersey U.S. Attorney's office announced.

Peter Zuck, 67, who lives in Middletown, previously pleaded guilty before U.S. District Judge Joseph Rodriguez to one count of conspiracy to commit wire fraud and four counts of tax evasion. On Wednesday, Sept. 6, Judge Rodriguez sentenced Zuck to 36 months in a federal prison.

Zuck was convicted in April of this year of conspiring to defraud 76 victims of more than $4 million and hiding more than $273,000 in taxes. Zuck was a co-founder of Osiris Partners LLC and Osiris Partners Fund Limited, based in Jersey City. He was a managing member and portfolio manager of the fund. Between June 2009 and November 2011, Osiris Fund Limited Partnership solicited 76 investors to invest $12 million in the fund, U.S. attorneys allege.

Zuck was named with Michael J. Spak, 45, of Chesterfield, Joseph C. Spak, 71, of Milltown and John R. Najarian, 36, of Hillsdale, as well as others in for their participation in Osiris.

Zuck admitted that members of the Osiris Fund Limited Partnership diverted $4 million in investors’ funds from the fund and fraudulently drew $3.9 million in management fees to themselves. Zuck also admitted that he was issued a $1.3 million salary from Osiris, which he used to pay for personal expenditures but did not report as income to the IRS. Instead, Zuck had his payment checks deposited into an account that he controlled, but was in his son’s name. He falsely assigned the income to his son on IRS forms, but was caught by IRS agents. He admitted that he attempted to evade $273,417 in income tax.

This is not Zuck's first conviction for financial fraud: He previously pleaded guilty to three different incidents of security fraud, in 1994, 1997 and 2002, according to a report in the Asbury Park Press. He spent five years in prison for the 1994 conviction.

Yet when he got out, he founded Osiris and collected a salary of more than $1.3 million.