The former finance chief of a Florida-based hedge fund on Tuesday pleaded guilty to securities fraud in what prosecutors described as a $3 million embezzlement scheme.
Theodore Woo entered the guilty plea yesterday and is expected to be sentenced in mid-November, according to a news release issued by the U.S. Attorney for the Southern District of New York Jamie McDonald.
According to a filing in federal court in New York, Woo is accused of misappropriating millions of dollars from an unnamed hedge fund from 2022 to March of this year, when he was fired. One of the ways Woo obtained the money was by instructing the hedge fund’s administrator to make payments to two outside entities for “research consulting service.”
“In actuality, Woo controlled both entities, and neither entity had performed any service for the Fund,” the document stated. “Instead, after each transfer of funds from the Fund to those entities, the proceeds were transferred to bank accounts controlled by Woo.”
When an external auditor asked about the payments, Woo said that one of the entities was an independent consulting firm that had been tapped to “develop short investment ideas on a project-by-project basis,” the court filing said.
Woo, who began working at the fund in 2021, also made over 100 fraudulent transfers from the fund to another corporate entity he controlled called Deadpool LLC, according to prosecutors.
The fund’s chief investment officer early this year learned that an external auditor had identified suspicious payments for purported research services. Then, in March, Woo admitted to misappropriating money from the fund but “materially underestimated the sums he had taken,” the filing stated.
The filing went on to say that Woo used credit cards from the fund for plane tickets to Paris and Brazil and for “expenses at an adult entertainment establishment.”
In the news release, McDonald said that Woo “took advantage of his position as CFO.” The charge against Woo and his subsequent plea, McDonald said, “are indicative of this Office’s commitment to holding C-suite executives accountable when they engage in fraud.”
Neither the court filing nor McDonald’s news release identified the name of the hedge fund where Woo worked, but Bloomberg pointed to unrelated Securities and Exchange filings that show he worked at Miami Beach-based Windward Management LP.
