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Fund Defrauded 500 Investors, SEC Alleges

September 03, 1997|Bloomberg News

A California investment fund owned by a German citizen defrauded 500 American investors out of $18 million, the Securities and Exchange Commission alleged in a lawsuit. The SEC suit accuses Hartmut Haussecker, who owned Whittier-based Cihaco International Inc., of falsely promising returns as high as 60% from stocks, currencies and other financial instruments. A lawyer who previously represented Haussecker but has not yet been hired to defend him against the suit, said Haussecker, who is in Asia, asked him to review some of the SEC documents. "A lot of the disagreement deals with whether Mr. Haussecker or other people are responsible for the losses here," said Larry Merryman, a Santa Ana attorney. "That's probably what any discussions or litigation will deal with." The suit, filed in federal court in Salt Lake City, alleges Haussecker, 42, diverted all investment funds to buy nine expensive sports cars, including a Ferrari, Lamborghini, BMW and Lotus; a boat; a $1.5-million home in the Branson, Mo., area; and a home in Carmel. Haussecker is also accused of using investors' money to buy cars and jewelry for his girlfriend and her family. "It's an unusually large-scale fraud for this type of case," said Kenneth Israel, head of the SEC's Salt Lake City office. Most of the investors are from California, Missouri, Utah, Oregon and Idaho, Israel said. The SEC is seeking court injunctions against further activity by Haussecker and Cihaco and will try to recover some investor funds. Last week, U.S. District Judge J. Thomas Greene in Salt Lake City froze the assets of Haussecker, Cihaco and two other firms controlled by Haussecker.

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