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Former UBS employee pleads guilty to fraud

February 27, 2007|From Bloomberg News

A former account manager at a unit of UBS, Europe's biggest bank by assets, pleaded guilty Monday to helping a hedge fund manager steal about $2.5 million from investors, federal prosecutors said.

Justin Paperny, 31, of Studio City pleaded guilty to one count of conspiracy to commit mail, wire and securities fraud, the U.S. attorney's office in Los Angeles said in a statement. He faces as many as five years in prison.

Paperny, who worked for UBS Financial Services Inc., admitted at a hearing in Los Angeles federal court that he took kickbacks from the manager of GLT Venture Fund and that he lied to investors to persuade them to put money in GLT, prosecutors said. More than 40 investors suffered losses.

GLT manager Keith Gilabert pleaded guilty last year to conspiracy to commit fraud and is awaiting sentencing.

Paperny alleged that others at the brokerage firm were aware of the fraud. Thom Mrozek, a spokesman for the U.S. attorney's office, declined to comment.

UBS Financial Services has been cooperating with the government, spokeswoman Karina Byrne said.

"The firm has concluded that no one at UBS other than Mr. Paperny has participated in Mr. Gilabert's fraudulent activity," Byrne said.

Robert Corbin, a lawyer for Paperny, didn't return a call to his office seeking comment.

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