Ex-Chicago fund manager charged in $3.5M fraud

By Tribune staff report
Posted Jan. 19 at 5:51 a.m.

A former Chicago hedge fund manager accused of engaging swindling more than $3.5 million from approximately 48 victims who invested in funds he purported to operate, has turned himself in to federal authorities.

James Brandolino, 42, of Joliet and formerly of Chicago, was charged with mail fraud in a criminal complaint filed in U.S. District Court by U.S. Attorney Patrick Fitzgerald. Prosecutors said he obtained about $4.7 million from 48 high net worth investors since 2003 for purported managed futures trading accounts and a commodity pool investment. He provided about $1.1 million in investor redemptions and allegedly lost roughly half of the total invested funds through trading and misused most of the remaining funds for his own benefit, prosecutors said.

Mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. Brandolino appeared Tuesday afternoon before U.S. Magistrate Judge Michael Mason and asked to remain in federal custody.

According to the charges, Brandolino has held various National Futures Association registrations in the commodities brokerage business, with exchange floor trading privileges at the Chicago Board of Trade, now part of the CME Group. He has also been a principal of several commodities trading businesses, including Brandolino Investment Group, Lloyd Lewis Capital Inc., Falcon Trading Group Inc. and Falcon Capital Partners LLC.

Between 2003 and 2007, Brandolino allegedly accepted approximately $1.5 million from roughly 20 investors and routinely generated false statements showing steady returns even though by mid-2007 he had lost most of the money through trading and misused most of the remaining funds for himself, prosecutors said. Until this fund closed in July 2008, Brandolino allegedly traded equity index futures and earned actual net returns of about 15.5 percent, but he did not tell any of his investors that he had stopped trading in mid-2008 and failed to return their money, according to the charges.


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