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Friday, Jun 2, 2023

Hedge Fund Executive Admits to Bilking Investors Out of Millions

A former account vice president for a Valencia brokerage firm has pleaded guilty to conspiring to commit securities fraud. Justin Paperny of Studio City admitted that he and Keith G. Gilabert, the founder of Capital Management Group Holding Co. in Valencia, lied to investors about the risks and performance of the firm’s GLT Venture Fund in order to convince them to contribute. An investigation by the FBI found that Paperny, who received kickbacks from Gilabert, had told management and supervisors at the brokerage firm that GLT was not following its stated investment strategy and that many were aware of the illegal activities. The deception resulted in more than 40 investors losing at least $2.5 million, according to the U.S. Attorney’s Office. Paperny, 31, pleaded guilty to mail, wire and securities fraud and agreed to cooperate with investigators in an ongoing criminal probe into Capital Management and the venture fund. Sentencing is scheduled for July 30. Paperny faces up to five years in prison. Gilabert pleaded guilty last year to conspiring to commit mail, wire and securities fraud and is awaiting sentencing. Chris Coates

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