Tuesday, November 13 , 2018, 10:36 am | Fair 69º

 
 
 
 

Santa Barbara Investment Managers Arrested in Alleged Securities Fraud

Status of local Westridge Capital Management employees remains unclear.

Santa Barbara-based Westridge Capital Management, 222 E. Carrillo St., is now at the center of a transcontinental securities fraud investigation.
Santa Barbara-based Westridge Capital Management, 222 E. Carrillo St., is now at the center of a transcontinental securities fraud investigation. (Lara Cooper / Noozhawk photo)

Accused of stealing hundreds of millions of dollars from their clients for more than a decade, the two principals of Santa Barbara-based Westridge Capital Management were arrested in New York on Wednesday and charged with securities fraud. University institutions, charitable foundations, and retirement and pension plans were all mentioned as clients.

Paul Greenwood, 61, of North Salem, N.Y., and Stephen Walsh, 64, of Sands Point, N.Y., were charged in Manhattan — by the same office prosecuting the Bernard Madoff fraud case — with securities fraud, wire fraud and conspiracy. Both men also were sued in civil court by the Securities and Exchange Commission and the Commodity Futures Trading Commission, which alleged that the partners misappropriated more than $553 million and “fraudulently solicited” $1.3 billion from investors since 1996.

The complaint said the men, who also owned WG Trading Co. in Greenwich, Conn., used client money “as their personal piggy-bank to furnish lavish and luxurious lifestyles, which include the purchase of multimillion-dollar homes, a horse farm, cars, horses, and rare collectibles such as Steiff teddy bears.” Walsh is also accused of wire-transferring $2 million to his former wife since 2007.

After an initial appearance before a federal magistrate, both men were released on individual $7 million bonds, with their travel restricted to the New York area.

On Feb. 5, the pair was audited by the National Futures Association, a Chicago-based regulatory agency. When Greenwood and Walsh refused to meet with the agency, they were suspended from NFA membership a week later. On Feb. 6, the team solicited a $21 million investment from the University of Pittsburgh, just one day after they had been audited. After learning Greenwood and Walsh had been suspended, the university made repeated demands to ascertain the security of the money; it has invested with Westridge since 2002 and has more than $65 million unaccounted for.

Last week, Pitt and Carnegie Mellon University filed federal lawsuits in Pennsylvania seeking to find out what happened to some $80 million invested with Greenwood and Walsh.

Only some of the firm’s clients have been named, but Santa Barbara County public employees will be glad to know they’re not on the list.

Tom Ford, the county’s interim retirement administrator, sounded relieved as he explained that county employee retirement and pension funds had never been managed by the company.

“We are happy to say that we are not involved with Westridge Capital Management company,” Ford told Noozhawk on Wednesday afternoon.

Ford said many victims of fraudulent schemes, including other counties, made decisions to invest with a broker based on reputation, instead of checking backgrounds and records with the SEC. Only after due diligence and a thorough search is conducted should county governments make investment decisions, he said.

But several counties in California weren’t blessed with such foresight. The Sacramento County Employees Retirement System said it had several million dollars invested with the company, and has only been able to reclaim $5 million of what amounts to a $57 million investment.

Representatives reached at Westridge Capital Management, 222 E. Carrillo St., said they had no comment Wednesday.

Two Santa Barbara police cars were parked outside the building Thursday. The Pacific Coast Business Times reported that officials have declined to comment on James Carder and Mark Yeager, who, according to the newspaper, apparently ran Westridge’s day-to-day operations. An FBI spokeswoman said no charges have been filed against them.

Click here for a related article.

Write to [email protected]

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made using a credit card, Apple Pay or Google Pay, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Email
Select your monthly membership
Or choose an annual membership
×

Payment Information

Membership Subscription

You are enrolling in . Thank you for joining the Hawks Club.

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.
You may cancel your membership at any time by sending an email to .(JavaScript must be enabled to view this email address).

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >