A Mustaphalli Capital Partners advisor who bilked more than $11 million from elderly clients through high-risk trading is facing charges of grand larceny, fraud, and forgery. New York Attorney General Barbara D. Underwood recently announced the charges against hedge fund owner,  financial adviser and former Citigroup investment advisor Dean S. Mustaphalli.

According to the Attorney General, Queens financial advisor Dean S. Mustaphalli allegedly invested money from elderly investors in high-risk accounts held at his hedge fund, Mustaphalli Capital Partners Fund LP, without their knowledge or consent, cheating many clients out of their life savings.

Advisor Engages in Unsuitable High-Risk Trading 

Attorney General Underwood said that Mustaphalli transferred clients’ savings out of low-risk conservative accounts and into his high-risk hedge fund, despite knowing clients’ preferences for conservative investments.

Prosecutors claim that in 2012 Mustaphalli moved $7.1 million of his clients’ money into Mustaphalli Capital Partners and engaged in risky short-term options trades and leveraged trading. According to court documents, he lost 92 percent of the investments’ value by the end of the year. In one case, the advisor lost more than $2 million on a single bet on the volatility of the price of Mastercard stock.

Despite the losses, Mustaphalli continued to engage in such behavior. Three years later, in 2015, Mustaphalli added 22 new clients to the hedge fund with funds totaling $5 million. According to the government, by the end of the 2015 Mustaphalli Capital Partners had lost about 80 percent of its value due to Mustaphalli’s high-risk trading strategy.

To conceal his activities from clients, he forged opening account documents and sent fake email addresses for his clients. Once Mustaphalli was confronted by clients, he blamed the hedge fund’s losses on the market instead of admitting to the fraudulent activity.

Prior to setting up Mustaphalli Capital Partners, the advisor worked for Citigroup. According to prosecutors, Mustaphalli resigned from Citigroup in 2009 as a result of customer complaints.

Mustaphalli Capital Partners Advisor Also Facing Civil Suit

Mustaphalli is also facing a civil suit filed by the New York Attorney General’s office. Mustaphalli’s attorney in the civil case has filed a request to stay that action in light of the criminal case.

He is currently facing a $2 million bail and as of publishing remains in jail. He is due back in court later this month on June 26, 2018.

Are You a Victim of Stockbroker Misconduct?

If you think you lost money as a result of Mustaphalli Capital Partners or financial advisor Dean S. Mustaphalli, contact an experienced stockbroker misconduct attorney today.

Speak with an Experienced Attorney Today

Contact an experienced investment fraud attorney at Dimond Kaplan & Rothstein, P.A. for a free consultation to review your rights and options.

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