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Hauke receiver files suit against his former accounting firm

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The receiver representing investors in the Ponzi scheme run by convicted money manager Keenan Hauke has sued Hauke's former accounting firm, charging that its negligence contributed to millions of dollars in investor losses.

Carmel attorney William Wendling Jr. filed suit in Marion Superior Court on Monday against Indianapolis-based DeWitt & Shrader PC and executives David DeWitt and Matthew Hickey.

The lawsuit claims the 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.

DeWitt & Shrader had served as the accounting firm for Hauke’s Fishers-based hedge fund, Samex Capital Partners LLC, from January 2006 until April 2011.

Wendling charges in the complaint that DeWitt & Shrader failed to monitor Samex’s bank accounts, enabling Hauke to pilfer investor funds for his personal use.

“As Samex’s accountants, defendants either knew or should have known that Hauke was not following generally accepted accounting practices and compliance procedures, and either knew or should have known that Hauke was stealing from Samex and was operating a Ponzi scheme,” Wendling said in the suit.

David DeWitt, the firm's top executive, did not immediately return a call seeking comment.

Hauke pleaded guilty to fraud in December and was sentenced to 10 years in prison in March. He also was ordered to make restitution of $7.1 million, the amount the court determined he swindled from 67 investors.

In the suit, though, Wendling estimates the losses at $10 million. He is seeking to recover all investor losses attributed to DeWitt & Shrader’s negligence, according to the suit.

The complaint against DeWitt & Shrader follows a separate suit Wendling filed in April on behalf of investors.

He sued Larcher Investments LP and one of its managers, David Larcher, in federal court in Indianapolis. Larcher is executive vice president of Vestar Development, a Phoenix-based real estate developer.

The lawsuit claims Larcher deposited about $2 million into Samex through a series of payments and reinvested profits in 2002, 2004 and 2005.

Then, in 2008, Hauke wired Larcher nearly $2.6 million, describing the extra money as a gain on Larcher’s investments. Wendling claims the money Larcher received actually came out of the pockets of other investors.

The case is pending in federal court.

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. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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