Montclair Hedge Fund Owner Guilty; Scammed Investors For $4M

MONTCLAIR, NJ — A federal jury has convicted a Montclair man and hedge fund owner/manager of scamming two investors out of $4 million, prosecutors said.

Nicholas Lattanzio, 61, of Montclair, was convicted on all counts of an indictment charging him with two counts of wire fraud and two counts of securities fraud following a three-week trial in Newark federal court, the U.S. Attorney’s Office (New Jersey) stated Thursday.

According to prosecutors, from June 2013 through November 2014, Lattanzio orchestrated a “large-scale scheme” through which he, his hedge fund, the Black Diamond Capital Appreciation Fund L.P. (BD Fund), and several other related entities collected millions of dollars in upfront fees from two "unsuspecting corporate investors" in exchange for the promise of future loans or investment opportunities that did not materialize.

Prosecutors stated:

“Instead of investing the victims’ money as promised, Lattanzio stole the majority of the funds and used them to pay himself more than $500,000 in salary and for numerous personal expenses, including the purchase of a $1 million home in Montclair, a new Range Rover, a diamond ring that cost $100,000, and the payment of half a million dollars in credit card debt that he incurred for other personal expenses. Lattanzio lied to the victims about the status of their funds to conceal the scheme and mislead them into believing that their investments were safe.”

The wire and securities fraud counts with which Lattanzio was convicted each carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The government also forfeited a 2013 BMW 650 and various pieces of jewelry, and is seeking forfeiture of the home Lattanzio purchased in Montclair, prosecutors said.

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