A man who allegedly lost more than $400 million of investors' money by betting against Internet stocks just before they took off was charged with securities fraud Thursday in New York.
Michael Berger, 28, pleaded innocent and waived indictment, a gesture often used when planning to plead guilty later in a deal with prosecutors.
According to federal prosecutors, Berger bilked investors through a hedge fund--a high-risk vehicle for investors who speculate on movements in the financial markets.
Berger persuaded at least 300 investors to put up more than $575 million. The fund bet that the stocks of Internet-related companies would decline. Instead, they continually rose.
Prosecutors said Berger concealed the losses by doctoring the financial records and continued to promote his strategy to investors.
The charges carry up to 15 years in prison and fines of $1.25 million.
Several months ago, the Securities and Exchange Commission filed suit against Berger, alleging that he had attracted investors by grossly exaggerating the success of his hedge fund and its market value.