theftlossdeduction.com

12/8/09 - NEW YORK — A Rockland-based financial adviser accused of stealing $160 million from more than 400 investors has agreed to plead guilty to federal charges Friday, according to a legal document filed in federal court.

James Nicholson, 42, who grew up in Haverstraw and lived in a multimillion-dollar mansion in Saddle River, N.J., has been charged in a four-count federal indictment with one count each of securities fraud, investment adviser fraud, mail fraud and structuring.

Nicholson, a father of three young sons and a former Stony Point resident, is accused of soliciting millions of dollars from investors through deceit, hyping the value of his hedge funds and using their money for himself.

Many of his investors, including friends and family, have said they invested their life savings, college funds, trust funds and retirement funds in the Ponzi scheme alleged to have been orchestrated by the smooth-talking Nicholson, who was known to swear on his children's lives that his clients would make money and their investments were safe.

While hundreds of investors lost hundreds of thousands of dollars, Nicholson invested in an airplane; bought a $27 million oceanfront house in Southampton, a $4.75 million condominium in Palm Beach, Fla., and an $8.5 million condominium in Manhattan; and rented luxury business offices in Pearl River and Manhattan.

Nicholson faces a maximum of 65 years in prison if convicted of all the charges, though he could receive far less under sentencing guidelines. He also faces fines topping $6 million.

The indictment also seeks to seize more than $150 million in assets and five properties from Nicholson, who ran investment offices in Pearl River and midtown Manhattan.

The exact charges Nicholson will plead guilty to in U.S. District Court in Manhattan remain unknown. Prosecutors have not filed the documents outlining the plea and potential sentence.

U.S. District Court Judge Richard J. Sullivan signed the order stating a "plea will be held" on Friday in the case involving Nicholson.

The judge's order signed Friday notes the government is obligated to provide federal crime victims with "reasonable, accurate and timely notice of any court proceeding involving release, plea, sentencing or any parole proceeding."

Nicholson's lawyer, Erika McDaniel Edwards of Manhattan, didn't return a telephone call for comment.

She has said that the investors' money was lost through market declines and that the prosecution has exaggerated the amount lost and wrongly attributed it to criminal means.

Several of Nicholson's investors said Monday that they had not yet been notified of the court proceeding by the U.S. Attorney's Office in Manhattan.

"We haven't heard a thing yet," Vince Papke of Tuxedo said. "We'd love to find out in the plea deal if there is any money left (for) us investors."

Papke first invested with Nicholson 15 years ago and has lost $280,000.

Another investor, Stephanie Chamberlin of Bergen County, N.J., wants to see Nicholson receive the maximum sentence.

"As an investor, my only hope is to have some closure in knowing that Jim has acknowledged that he has committed fraud on several counts and stolen millions from children, adults and generations of families," Chamberlin wrote in an e-mail. "I know that Friday will not be solid closure, as that will only come when the judge sentences Jim to the maximum sentence of 65 years in prison. Sixty-five years will be just about enough time for Jim to realize what he has done to investors, friends and his own family."

The court-appointed receiver, Lee Richards of Manhattan, estimated little cash would be available from Nicholson's fortune and $39.5 million in property for investors after mortgages and costs are paid.

The receiver and other lawyers will be paid several million dollars for their work through proceeds from the sale of Nicholson's nine-bedroom beach house for $25.8 million.

LoHud.com

12/09 - James Nicholson, a Saddle River hedge fund manager accused of bilking investors of as much as $160 million, has tentatively agreed to plead guilty to charges his Westgate Capital Management LLC was a Ponzi scheme.

A plea hearing is set for noon Friday in federal court in Manhattan, according to a court order signed by U.S. District Judge Richard Sullivan.

Erika Edwards, one of Nicholson's attorneys, said Monday she and federal prosecutors have verbally reached an agreement, but she declined to provide details as they continue to work out a formal settlement that would be signed by Nicholson.

"I'm anticipating a plea on Friday," she said, "but it's unofficial because we haven't even seen it, it hasn't been signed, it hasn't been approved by either side."

Nicholson, 43, ran Westgate, based in Rockland County, for a decade, until he was arrested in late February. His alleged scheme collapsed in December 2008, when $5 million in investor redemption checks bounced, and other investors were unable to claim millions of dollars, prosecutors in New York said. Nicholson is charged with securities, investment adviser and mail fraud as well as structuring [for allegedly trying to avoid reporting currency transactions], and faces a maximum of 65 years in prison.

A conclusion of the criminal case against Nicholson would set the stage for prosecutors to begin helping Westgate's more than 370 investors — some of whom have apparently lost much of their savings, retirement and children's college funds — recoup some of their losses.

The number of years Nicholson could serve in prison depends on what sentence prosecutors recommend and what Sullivan eventually approves. The U.S. Attorney's Office declined to comment.

Pleading guilty before prosecutors have begun time-consuming preparations for a trial could be among the factors in prosecutors' recommendations, as could the extent to which Nicholson has cooperated — or pledged to — with the government, said Michael Weinstein, a former federal prosecutor now with the Cole Schotz Meisel Forman & Leonard law firm in Hackensack.

Nevertheless, pleading guilty to financial fraud in the wake of Bernard Madoff's 150-year sentence for his multibillion-dollar Ponzi scheme — against a backdrop of populist ire towardWall Street — is probably not ideal for any defendant.

"Judges have become much more attuned to the victims in these types of cases," handing down stricter sentences, Weinstein said.

Judges and the public, he added, "simply have no appetite for these continued financial crimes that have been occurring in the last couple of years."

Friday's hearing could also mark the first time the public has heard Nicholson's side of the story. His attorneys haven't offered responses to the government's allegations, and a guilty plea could come with a formal statement by Nicholson outlining what he allegedly did.

Also Friday, lawyers in another courtroom in the same federal courthouse are scheduled to discuss a case related to Westgate. A status conference in the lawsuit filed in September by Lindy Boville, Nicholson's ex-girlfriend who alleges she was improperly fired by RBC Capital Markets Corp. because of their relationship, is scheduled for 10:30 that morning.

In the Securities and Exchange Commission's civil case against Westgate, attorneys for a court-appointed receiver were due to submit a plan for winding down the fund's liquidation last week, but according to court records, a computer glitch has delayed the report.

NorthJersey.com