Film Producer and General Counsel of Investment Advisor Guilty of Multimillion-Dollar Investment Scheme

Film Producer and General Counsel of Investment Advisor Guilty of Multimillion-Dollar Investment Scheme

David Bergstein, a film producer and entrepreneur, and Keith Wellner, the former General Counsel, Chief Operating Officer, and Chief Compliance Officer of Weston Capital Asset Management, a registered investment advisor, were arrested on Wednesday, November 9. They were charged with defrauding investors of more than $26 million.

Bergstein was arrested in Hidden Hills, California, and was presented before a Magistrate Judge in Los Angeles. Wellner was arrested in Manhattan, and was presented before United States Magistrate Judge Sarah Netburn in manhattan federal court.

According to the Indictment unsealed in Manhattan federal court, from 2011 through 2012, the defendants engaged in a scheme to defraud by:

  1. Concealing material information from Weston investors about financial transactions involving their money;
  2. Transferring funds from one pool of Weston’s investors, without the required disclosures to investors concerning conflicts of interests; and
  3. Misappropriating aa portion of funds transferred from investor accounts for their own anf others’ benefit.

Bergstein and Wellner orchestrated this scheme in part through two transactions involving Weston investors’ assets: first, a loan from a Weston fund called the Partners 2 (or “P2”) Fund, and, second, a swap agreement with a Weston fund called the Wimbledon TT Portfolio (the “TT Portfolio”).

Bergstein, 54, of Hidden Hills, California, and Wellner, 49, of Manhattan, are charged with the offenses set forth in the chart below. The statutory maximum sentences are prescribed by Congress and provided here for informational purposes only, as sentencing of the defendants would be determined by the judge.

Count Charge Defendants Maximum Penalties
1 Conspiracy to Commit Investment Adviser Fraud and Securities Fraud (18 U.S.C. § 371)

 

David Bergstein

Keith Wellner

Five years in prison and a $250,000 fine or twice the gross gain or loss from the offense
2 Investment Adviser Fraud (15 U.S.C. §§ 80b-6 & 80b-17; 18 U.S.C. § 2) David Bergstein

Keith Wellner

Five years in prison and a fine of $10,000
3 Investment Adviser Fraud (15 U.S.C. §§ 80b-6 & 80b-17; 18 U.S.C. § 2) David Bergstein

Keith Wellner

Five years in prison and a fine of $10,000
4 Securities Fraud (15 U.S.C. §§ 78j(b) & 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2) David Bergstein

Keith Wellner

20 years in prison and a $5,000,000 fine or twice the gross gain or loss from the offense
5 Securities Fraud (15 U.S.C. §§ 78j(b) & 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2) David Bergstein

Keith Wellner

20 years in prison and a $5,000,000 fine or twice the gross gain or loss from the offense
6 Wire Fraud (18 U.S.C.      §§ 1343 and 2) David Bergstein

Keith Wellner
 

20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense
7 Conspiracy to Commit Wire Fraud (18 U.S.C. § 1349) David Bergstein 20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense