ILNews

Hauke accounting firm to pay $1.8M in fraud settlement

Jeff Newman
July 23, 2014
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DeWitt & Shrader PC, an Indianapolis-based accounting firm that worked for convicted Ponzi schemer Keenan Hauke, has agreed to pay $1.8 million to settle a state lawsuit, Indiana Secretary of State Connie Lawson announced Tuesday.

Hauke, a prominent money manager from Fishers who led hedge fund Samex Capital Partners LLC, was sentenced to 10 years in prison in December 2011 for securities fraud.

DeWitt & Shrader served as the accounting firm for Samex from January 2006 until April 2011.

The lawsuit claims the accounting firm violated the Indiana Securities Act and committed negligence and fraud, as well as breach of contract, by failing to monitor Hauke’s bank accounts.

“While Hauke was the perpetrator of this scheme, DeWitt & Shrader gave his scam credibility,” Lawson said in a prepared statement. “As the fund’s accountants, they had a responsibility to the investors to check Hauke’s work before issuing client account and tax statements.”

David M. DeWitt, principal of DeWitt & Shrader, did not immediately respond to messages seeking comment.

When the suit was filed against his firm in 2012, DeWitt told IBJ he thought the complaint was without merit and he planned to fight it. He eventually agreed to settle.

“Accountants or other licensed professionals who also hold securities licenses cannot afford to turn a blind eye if they see or suspect securities fraud,” Indiana Securities Commissioner Carol Mihalik said in a prepared statement. “They have an obligation to take action and in this case, they did nothing.”

Hauke admitted to masking huge losses in the hedge fund he operated that resulted in dozens of investors losing millions of dollars. He was 41 when he was sentenced to prison and ordered to pay $7.1 million in restitution.

A state-appointed receiver, William E. Wendling Jr., has since estimated the losses at more than $9 million and the number of victims at close to 100.

“The funds secured from this settlement will go toward repaying Hauke’s victims,” Lawson said. “Helping Hoosier victims is always our No. 1 priority and we will continue to work to maximize their restitution.”

Lawson said the state has returned more than $1 million to 97 investors so far. The funds were recovered through asset freezes, liquidation of Hauke’s accounts, and clawback litigation against Samex investors who made false profits from Hauke’s scheme.

The receiver also plans to sell a condo in Barbados worth about $360,000 that Hauke purchased with investor money.

Lawson said four Hauke victims also received $42,000 from the state’s Securities Restitution Fund.

Before his guilty plea, Hauke was a high-profile wealth manager who made regular appearances on CNBC, Fox Business Network, Bloomberg Television and Bloomberg Radio. He also wrote an investing column for IBJ.

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  1. I will be filing a lawsuit in Tippecanoe County for so many violations in a case we became involved in, including failure to contact through mail, Violation of 4th Amendment rights, Violation of Civil Rights, and so on. Even the Indiana Ombudsmen Bureau found violations and I have now received the report and they are demanding further training in Tippecanoe County. I am going to make sure they follow through!!!

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  3. I thought the purpose of the criminal justice center was to consolidate all the criminal services and get them out of downtown to clean up the place. Why in the HELL are the civil courts moving? What a burden to all the downtown law firms. Now we all get to work downtown, but then have to get in a car and COMMUTE to court? Who approved this idiocy?

  4. I drive through the neighborhood whenever I go to the City-County Building or the Federal Courthouse. The surrounding streets are all two way with only two lanes of traffic, and traffic is very slow during rush hour. I hope that enough money has been allocated to allow for improvement of the surrounding streets.

  5. I have had an ongoing custody case for 6 yrs. I should have been the sole legal custodial parent but was a victim of a vindictive ex and the system biasedly supported him. He is an alcoholic and doesn't even have a license for two yrs now after his 2nd DUI. Fast frwd 6 yrs later my kids are suffering poor nutritional health, psychological issues, failing in school, have NO MD and the GAL could care less, DCS doesn't care. The child isn't getting his ADHD med he needs and will not succeed in life living this way. NO one will HELP our family.I tried for over 6 yrs. The judge called me an idiot for not knowing how to enter evidence and the last hearing was 8 mths ago. That in itself is unjust! The kids want to be with their Mother! They are being alienated from her and fed lies by their Father! I was hit in a car accident 3 yrs ago and am declared handicapped myself. Poor poor way to treat the indigent in Indiana!

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