Phillip Galles had all the trappings of a successful hedge fund manager — a fleet of luxury cars, paintings by masters like Picasso and Chagall on his walls, and a billion dollars in the bank.
But it was all a carefully-crafted lie aimed at drawing investors into a Ponzi scheme, federal authorities say.
Galles, 57, of Chicago, was charged Thursday with bilking more than 50 investors out of over $6 million, according to court documents filed by federal prosecutors in New Jersey and the Commodity Futures Trading Commission.
Galles was ordered held late Thursday following his first appearance in federal court in Illinois. It wasn’t immediately clear if he had retained an attorney.
Investigators say Galles presented himself as a highly-successful investor, who had several billions of dollars in assets under management in his fund, Tyche Asset Management LLC. He claimed to have an MBA from the prestigious Kellogg School of Business at Northwestern University.
Galles said he had cut his teeth running a fund in the Cayman Islands that eventually grew to $2 billion and that he used the same strategy to operate Tyche.
To top it off, he filled his Instagram feed with pictures of a fleet of luxury cars he claimed to own, including Lamborghinis and Ferraris. The walls of the homes he said he owned in Miami, Chicago and Palm Beach were covered with paintings by Chagall and Picasso.
Prosecutors say it was all a mirage designed to lure investors into a scam.
A separate civil filing by the CFTC charged that Galles claimed to investors that his fund, a commodity pool focused on commodity futures, had generated returns of up to 200% annually and that investors could redeem their money at any point.
Galles never invested the money, however, and used new funds that he raised from clients to pay for his own expenses or to pay earlier clients, federal prosecutors say.
The scam was eventually unwound when prosecutors in New Jersey sent in an undercover agent posing as an investment manager. They say Galles claimed that Tyche was generating annual returns of 336% and had raised $2 billion within 60 days of opening, including from a sovereign wealth fund in Kuwait and a well-known owner of a sports team. None of it was true, prosecutors said.
Galles faces up to 20 years in prison if convicted.
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