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Post date: December 4 2015

A.G. Schneiderman Announces Conviction Of New York City Hedge Fund Manager In Securities Fraud Case

Moazzam Ifzal Malik, CEO Of Seven Sages Capital, L.P. And Wolf Hedge, LLC, Convicted Of Securities Fraud And Grand Larceny And Faces Up To 20 Years in Prison

Schneiderman: Today’s Verdict Brings Justice To Those Who Were Brazenly Defrauded

NEW YORK – Attorney General Eric T. Schneiderman announced the conviction of Moazzam Ifzal Malik, a.k.a. Mark Malik, 33, of Lahore, Pakistan, for stealing over $800,000 from investors by fraudulently soliciting them to invest in his purported hedge funds, including Seven Sages Capital, L.P. and Wolf Hedge LLC.   Following a two-week trial in New York County Supreme Court, the jury convicted Malik of all counts charged in the Attorney General’s 28-count indictment, including Grand Larceny and Securities Fraud. Malik faces up to 20 years in prison.  

Today’s conviction brings justice to those who were brazenly defrauded,” said Attorney General Schneiderman. “We won’t tolerate those who attempt to defraud investors in the state. Our message is clear: if you commit securities fraud in New York, we will bring you to justice.

During the course of the trial, which included the testimony of 17 witnesses and the admission of hundreds of pages of exhibits, the prosecutor presented evidence that between 2011 and early 2015, Malik lured over a dozen investors with false representations that he managed multi-million dollar hedge funds that would guarantee high returns. 

The evidence at trial showed that Malik claimed to be the founder, CEO and fund manager of a series of hedge funds from 2011 to 2015, including Wall Street Creative Partners, L.P., Seven Sages Capital, L.P., American Bridge Investments L.P., and, most recently, Wolf Hedge LLC. Malik advertised his purported hedge funds on his own website on the internet, and also cold-called investors, enticing them to invest by falsely representing that he had extensive experience on Wall Street and that his funds routinely outperformed the market by over 200%.

The purported success of Seven Sages Capital, L.P. and American Bridge Investments L.P. was listed on financial websites, including Bloomberg and Barclay Hedge.  In 2012, Barclay Hedge awarded American Bridge Investments L.P. the “yearly performance award” and ranked the fund as the year’s top performing equity long-short fund with over $100 million in assets. The evidence at trial showed that this ranking was based on false documentation submitted by Malik to Barclay Hedge, including a forged financial audit.  The evidence further showed that although Malik claimed to have millions in assets management, in actuality his brokerage accounts never held more than $90,000. 

The evidence at trial further showed that Malik promised his victims a partnership interest in his hedge funds, which he claimed held a multi-million dollar portfolio of investments in various high-profile IPO’s and secured bond transactions. Malik created false offering memoranda and marketing material stating that his hedge funds had over $100 million in assets under management. To further his fraudulent scheme, Malik issued fabricated account earnings statements to his victims, which indicated that their investments were consistently earning profits. Instead of investing in securities as promised, Malik diverted investor monies for his own personal use, including $215,000 in cash withdrawals and an additional $210,000 for hotels, airline tickets, rental cars, restaurants, electronics, utilities and even a karaoke bar.

According to his website, Malik “has over a decade of experience on Wall Street in brokerage and in Management” and “used to lead teams to manage assets over USD 5 billion at various alternative asset management firms in New York.” However, the evidence at trial revealed that Malik’s only financial experience was as a trainee at a New York City financial consulting firm, that Malik was only registered as a broker from 2007 to 2009, and that over the past 15 years, Malik had been employed as a security guard, waiter, and traffic agent for the New York City Police Department.

Malik testified at trial and admitted to soliciting dozens of investors in the United States and abroad, including investors in New York, Florida, New Zealand and Switzerland. The evidence at trial showed that based on Malik’s false representations, at least seventeen victims invested over $800,000 in Malik’s purported hedge funds, which Malik then diverted for his personal use.

Today, before the Honorable Ruth Pickholz in New York County Supreme Court, the jury found Malik guilty of two counts of Grand Larceny in the Second Degree (a Class C felony), three counts of Grand Larceny in the Third Degree (a Class D felony), 17 counts of Forgery in the Second Degree (a Class D felony), five counts of Securities Fraud under the Martin Act (a Class E felony), and one count of Scheme to Defraud in the First Degree (a Class E felony).   He is scheduled to be sentenced on December 18.

This conviction is the latest in a series of securities fraud prosecutions brought by the Attorney General’s Criminal Enforcement and Financial Crimes Bureau. In June 2015, the Bureau charged Albany broker Frederick E. Monroe, Jr., Senior Vice President of Capital Financial Planning, LLC, with allegedly stealing over $1 million from investors by fraudulently soliciting them to reinvest their retirement monies and then diverting their monies for his personal use.  In January 2015, the Bureau convicted broker Khawaja Saud Masud for stealing over $1 million from a retired pediatrician and his wife by fraudulently soliciting investments in his purported hedge fund, RKS Capital, LP.  In January 2015, the Bureau charged William Vogt on an 18-count indictment for allegedly posing as an internationally renowned fashion designer named “Bill Bolland” to lure his victim into making more than $350,000 in investments.  In November 2014, the Bureau convicted Robert H. Van Zandt on a 33-count indictment for operating a $4.8 million Ponzi scheme; Van Zandt was sentenced to 3 2/3 to 11 years in prison. In March 2014, the Bureau arrested Wing K. Lim, owner of Wall Street Investment, LP, on a 31-count indictment for allegedly operating a $4.3 million securities fraud scheme; the case is scheduled for trial in January 2016.

The Attorney General thanks the New York Regional Office of the Securities and Exchange Commission, Division of Enforcement, and the Financial Industry Regulatory Authority, Criminal Prosecution Assistance Group, for their assistance in this investigation.

The investigation originated with a complaint to the Attorney General’s Investor Protection Bureau. Assistant Attorney General Desiree Cummings handled the initial investor complaint.

The criminal case is being handled by Assistant Attorney General Shanon N. LaCorte of the Criminal Enforcement and Financial Crimes Bureau. Legal Analyst Natasha Butalia is assisting on the case. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The Attorney General’s investigation was conducted by Investigator Ryan Fannon, Lead Investigator John Sullivan, and Deputy Chief John McManus, with the assistance of Legal Assistant II Edward Jaffe of the Investor Protection Bureau. Auditor Matthew Croghan worked on the case under Chief Auditor Edward J. Keegan. The Investigations Bureau is led by Chief Dominick Zarrella.

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