The government accused Eustace of creating false account statements, raising management fees based on false profits and transferring clients' money to himself. "This concludes a successful effort by our Division of Enforcement to stop fraud in its tracks, return as much money as possible to defrauded investors and to bring wrongdoers to justice," said CFTC Acting Chairman Walter Lukken.
The government concluded Eustace of Ontario, Canada, stole $200 million from clients from 2001 through 2005. Philadelphia Alternative, which traded in commodities futures and options, eventually collapsed in 2005 from the weight of the true losses and legal scrutiny for its businesses practices. The demise of Philadelphia Alternative and other hedge funds have spurred lawmakers to focus on tightening oversight on the hedge fund industry. - Gerald Magpily
See Dealscape: Soapbox: Hedging Risk
See U.S. Commodity Futures Trading Commission press release
Hedge fund founder of Philadelphia Alternative Asset Management Co. LLC. Paul Eustace knows a thing or two about funny accounting tricks. He allegedly was able to miraculously produce profits out of losses but now will be paying the price for convictions on charges that he defrauded commodity pool participants in four pools that he managed. He was ordered by the U.S. Commodity Futures Trading Commission on Aug. 19 to pay more than $279 million in restitution and a $12 million civil penalty as well as receiving a lifetime ban from trading. 
