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 just wanted to point out that Congressman Jim Sensenbrenner, Senator Feinstein, former Senate majority leader Bill Frist, and former attorney general John Ashcroft are responsible for this rubbish. We need to keep a eye on these corrupt, arrogant, and incompetent fools.

  2. Well I guess our politicians have decided to give these idiot federal prosecutors unlimited power. Now if I guy bounces a fifty-dollar check, the U.S. attorney can intentionally wait for twenty-five years or so and have the check swabbed for DNA and file charges. These power hungry federal prosecutors now have unlimited power to mess with people. we can thank Wisconsin's Jim Sensenbrenner and Diane Feinstein, John Achcroft and Bill Frist for this one. Way to go, idiots.

  3. I wonder if the USSR had electronic voting machines that changed the ballot after it was cast? Oh well, at least we have a free media serving as vicious watchdog and exposing all of the rot in the system! (Insert rimshot)

  4. Jose, you are assuming those in power do not wish to be totalitarian. My experience has convinced me otherwise. Constitutionalists are nearly as rare as hens teeth among the powerbrokers "managing" us for The Glorious State. Oh, and your point is dead on, el correcta mundo. Keep the Founders’ (1791 & 1851) vision alive, my friend, even if most all others, and especially the ruling junta, chase only power and money (i.e. mammon)

  5. Hypocrisy in high places, absolute immunity handed out like Halloween treats (it is the stuff of which tyranny is made) and the belief that government agents are above the constitutions and cannot be held responsible for mere citizen is killing, perhaps has killed, The Republic. And yet those same power drunk statists just reel on down the hallway toward bureaucratic fascism.

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