ILNews

Hauke receiver files suit against his former accounting firm

Back to TopCommentsE-mailPrint

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.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
ADVERTISEMENT