SEC says hedge fund manager helped Petters fraud

* SEC charges Marlon Quan, gets settlement funds freeze

* Accuses Quan of funneling millions to Petters

* SEC says Quan tried to divert funds from U.S. victims

By Sarah N. Lynch

WASHINGTON, March 28 (Reuters) – Connecticut-based hedge
fund manager Marlon Quan and two companies he controls were
charged with fraud by securities regulators for facilitating
the Ponzi scheme perpetrated by Minnesota-based swindler Tom

The Securities and Exchange Commission also said on Monday
it had obtained an emergency order against fund manager Marlon
Quan who had tried to divert a $14 million settlement payment
away from U.S. victims of Petters’ fraud.

Petters was sentenced last year to 50 years in prison for
running a $3.65 billion Ponzi scheme, in which returns were
paid using money from recent investors.

The SEC alleged that Quan, through Stewardship Investment
Advisors LLC and Acorn Capital Group LLC, had invested hundreds
of millions of dollars in the Petters scheme and pocketed over
$90 million in fees. But when Petters defaulted on payments
owed to the funds Quan managed, the SEC charges that Quan tried
to hide it from investors.

The SEC’s civil complaint against Quan was filed in a U.S.
District Court in Minnesota on Thursday, but announced on
Monday. SEC spokesman Kevin Callahan said the agency obtained
the emergency order late on Friday.

The SEC accused Quan of cooking up an agreement that would
have diverted the $14 million away from U.S. victims of the
scheme. The agency charged that Quan had arranged for nearly $6
million to be paid to a German bank, more than $7 million to go
to a liquidator appointed by a Bermuda court to help certain
overseas fund investors, and nearly $1 million directed to pay
Quan’s lawyers and for other expenses.

Brian Michael, an attorney for Quan, declined to comment
and said he expects to file a response to the SEC’s action in
the near future.

The case is U.S. Securities and Exchange Commission v.
Marlon Quan, Acorn Capital Group and Stewardship Investment
Advisors, U.S. District Court for the District of Minnesota,
No. 11-00723.
(Reporting by Sarah N. Lynch; Editing by Tim Dobbyn)

SEC says hedge fund manager helped Petters fraud