LaGuardia pictured in 2010 in Colombo, Sri Lanka.(CMR) New Jersey-based investment manager Donald LaGuardia has been accused of misappropriating $2.6 million from investors in his group’s Frontier Funds, which were domiciled in the Cayman Islands and Delaware.
In the 20 page SEC complain they alleged fraud involving funds in Delaware and the Cayman Islands, where the group’s registered agent was Ogier Fiduciary Services (Cayman) Ltd., in U. S. Securities and Exchange Commission v. Donald LaGuardia, Jr., of New Jersey, at the U. S. District Court for the Southern District of New York.
In the summary of allegations it states that dating back to at least 2013 through to May 2017 LaGuardia “perpetrated a three-pronged scheme to defraud private investment funds” and the funds’ investors. First, it’s alleged that LaGuardia misappropriated around $2.62 million from the LR Global Frontier Master Fund, Ltd. and two feeder funds through a “sham receivable and promissory note.”
Second, LaGuardia and the Firm. misstated, or directed others to misstate, the Net Asset Value (“NAV”) and returns of the Funds through other fraudulent accounting devices. Finally, LaGuardia and L-R Managers made material misrepresentations about the Funds’ audits, expenses and performance to investors and prospective investors.
It further alleges that he used the funds to pay for unauthorized firm and personal expenses including $300,000 on home renovations. He also directed some $590,000 for his personal benefit with the remainder used for managers’ expenses such as rent and salaries. The funds’s offering documents indicate such expenses should be paid by the Firm.
Additionally in addition to the misappropriation of the $2.62 million LaGuardia directed more than $830,000, amounts that had been recorded as Fund expenses, be reversed and. accounted for as another receivable “due from” L-R Managers, further artificially inflating the NAV of the Funds. Other actions were taken to artificially inflate the funds’ NVA value.
Finally, LaGuardia and. L-R Managers made material misrepresentations about the Funds’ audits, expenses and performance to investors and/or prospective investors in connection. with their investments and/or prospective investments in the Funds.
The SEC is looking to obtain permanent injunctions and monetary penalties.
LaGuardia, age 52, resides in Lavallette, New Jersey. LaGuardia was one of the founders of, and controlled, L-R Managers: he served as Chief Executive Officer and one of two Managing Principals of the Firm which, beginning in 2010, was the investment adviser to the LR Global Frontier Master Fund, Ltd. (“Master Fund”) and two feeder funds, the LR Global Frontier Fund, Ltd. (the “offshore Frontier Fund”) and the LR Global Frontier Fund LP (the “onshore Frontier Fund”).
LaGuardia was also a portfolio manager of the Frontier Funds. LaGuardia received a Certified Public Accountant designation. According to LaGuardia’s biography in marketing and offering material for the Frontier Funds, he received a Masters in Business Case 1:19-cv-05895 Document 1 Filed 06/24/19 Page 5 of 20 Administration (“MBA”) from New York University. In fact, however, LaGuardia never received such a degree.