IMA founder Kirk Wright guilty of fraud, money laundering

from: Atlanta Business Chronicle

A former investment manager from Marietta, Ga., is facing up to 710 years in prison and a $16 million fine after being found guilty on Wednesday on counts of mail fraud, securities fraud and money laundering over a $150 million hedge fund scheme.

After a two-week trial in Atlanta, a federal jury has returned a guilty verdict against Kirk Wright, 37, following the 2006 collapse of Atlanta-based International Management Associates (IMA). The jury found Wright guilty on all counts.

Wright was the founder, CEO and portfolio manager of IMA, which offered seven separate hedge funds from 1997 through early 2006. IMA also maintained offices in New York, Los Angeles, and Las Vegas. By early 2006, IMA had thousands of client accounts, and had taken in more than $150 million in investments.

However, Wright had been lying to his many investors since at least 2001 about investment performance and balances in their accounts. He reported substantial investment gains almost every month, when in fact he lost almost every dollar invested in the market. He also reported balances in client accounts that were up to 200 times greater than what actually existed.

During the period of the scheme, Wright diverted millions of dollars of investor's money for personal expenditures, including cash for himself and family members, jewelry, house renovations, a $500,000 wedding, up to six luxury vehicles, and multiple pieces of real estate, mainly in Atlanta and California.

IMA collapsed in early 2006, after several investors requested distributions, received bad checks and filed lawsuits. This investor group included several former National Football League players, who along with other victims testified at the trial.

As IMA collapsed, Wright took out $500,000 in cash, which was almost all the remaining money in IMA's accounts. He then abandoned the firm and fled Atlanta. He spent the next several months hiding, including from a federal arrest warrant he knew was issued in March 2006.

After a nationwide manhunt organized by the FBI, Wright was arrested on May 17, 2006, at the pool of the Ritz Carlton in Miami Beach, Fla., where he was staying under an alias. Evidence at trial showed when Wright was arrested, he had numerous pieces of false identification and ID-making equipment, a Mercedes he bought under one of his aliases and a substantial amount of cash.

Wright now faces a maximum sentence of 710 years in prison, a fine of up to $16 million and restitution for all victims losses. Wright has already been fined $20 million as part of a civil action prosecuted by the Atlanta Division of the U.S. Securities and Exchange Commission (SEC).

The federal government also will seek forfeiture of any and all property Wright got from his illegal activity, including jewelry appraised at more than $110,000, a 2004 Mercedes Benz E320 and $139,301 in cash.

"A measure of justice was served today for the hundreds of investor-victims in the stunning collapse of International Management Associates," said U.S. Attorney David E. Nahmias. "Those victims poured over $150 million into Wright's hedge funds over the years, only to find in 2006 that the money was gone and that Wright had lied to them for years. We hope this verdict sends a message -- both to the investing public about the need to carefully research any major investments, especially in unregistered ventures or funds, and to fraudsters, who should know that they remain a major focus of federal law enforcement."

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