Were You A Victim of Florida Asset Manager Steven Zoernack’s Hedge Fund Scheme?
Posted on Monday, October 9th, 2017 at 11:21 am
Erez Law is currently investigating Sarasota, Florida asset manager Steven Zoernack regarding a hedge fund scheme involving EquityStar Capital Management LLC, the Global Partners Fund and the Momentum Growth Fund – unregistered investment funds that Zoernack created and then managed through EquityStar. EquityStar was an unregistered investment adviser for Global Partners Fund and the Momentum Growth Fund.
According to a press release by the U.S. Attorney’s Office for the Middle District of Florida, Zoernack pled guilty to conspiring to commit wire fraud. Zoernack faces five years in federal prison, a $250,000 fine, and mandatory restitution to his victims in the amount of $2,890,518.54.
According to the plea agreement, Zoernack was the owner and operator of EquityStar Capital Management LLC, through which he formed and managed multiple hedge funds, including the Petroleum Black Energy Fund, the Global Partners Fund, and the Momentum Growth Fund. It is alleged that Zoernack and his co-conspirators marketed these funds to accredited investors across the United States and Canada from offices in Sarasota, Florida and Newport Beach, California. Zoernack and his co-conspirators raised more than $6 million from investors in the United States and Canada since the scheme began in May 2010. Zoernack misappropriated assets for his personal use, including monthly withdrawals of unauthorized salaries and bonuses ranging from $12,000-$25,000, which he used for personal and non-business expenses.
According to the Securities and Exchange Commission (SEC), Zoernack provided “false and misleading data about Momentum to Morningstar, Inc. (a company that provides independent investment research to individuals, financial advisers and institutions) in order to obtain for Momentum the title of “Morningstar Five Star Rated Fund,” which Zoernack then used to market the fund. For example, Zoernack misrepresented to Morningstar that the Momentum fund had been in existence for years longer than it actually had, and that its assets were more than 40 times higher than they actually were.”
Zoernack failed to disclose numerous material facts about his background and the funds he was managing, including:
- He had two previous felony fraud convictions.
- He previously filed for bankruptcy.
- He has a history of tax liens and adverse money judgments
- He owes hundreds of thousands of dollars in restitution to past fraud victims.
- He lied about his and his employees’ educational background, expertise as an investment manager, and his experience in the financial industry.
It was found that Zoernack concealed his past by misappropriating fund assets to pay an online reputation manager to manipulate Internet search engine results about him to prevent potential investors from learning of his past. Additionally, he impersonated former EquityStar employees and corresponded with investors online using fictitious names and phony email accounts. Zoernack also lied to potential investors about his portfolio’s ratings, profits, market returns, and losses.
Erez Law represents investors in the United States for claims against Florida asset manager Steven Zoernack, who is alleged to run a hedge fund scheme that raised more than $6 million from investors. If you were a client of EquityStar Capital Management LLC or another firm, and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.Disclaimer: Clients are responsible for costs. Contingency fee is calculated before deducting costs incurred in the case.