David Bryson, Hedge Fund Fraud, Connecticut 2023

Hedge Fund Executive Sentenced to 33 Months in Federal Prison for Fraud Scheme

David Bryson, a former managing partner and principal of New Stream Capital, LLC, a Ridgefield-based hedge fund, was sentenced to 33 months of imprisonment, followed by three years of supervised release, for engaging in a scheme to deceive investors in order to obtain and maintain investments.

In an effort to protect their own invested money and to collect more than $5.8 million in additional fees, New Stream executives devised and promoted a series of misrepresentations carefully calculated and designed to keep existing-investors in the dark about the true risk of the fund and to deceptively raise millions of dollars in new investments in an effort to keep their fund viable.

According to court documents and statements made in court, in November 2007, New Stream Capital, LLC (“New Stream”) launched new feeder funds, one based in the United States (“U.S. Fund”) and a series of funds based in the Cayman Islands (“Cayman Fund”).  New Stream also announced that its existing Bermuda Fund would be closing, and all foreign investors would have to move their investments into the Cayman Fund.

However, New Stream’s largest investor placed a redemption on its whole investment in the Bermuda Fund in March 2008.  At risk of losing their largest investor, Bryson, co-managing partner Bart Gutekunst and chief financial officer Richard Pereira set in motion a scheme to secretly keep the Bermuda Fund open and give priority to Bermuda Fund investors in an effort to reverse the redemption.

Through this scheme, New Stream investors were defrauded out of more than $46 million. From April 2008 to December 2010, Bryson collected more than $5 million in management fees and profit sharing while participating in this fraud scheme.

Bryson, Gutekunst and Pereira each pleaded guilty to one count of conspiracy to commit wire fraud on May 21, 2014.

This matter was investigated by the Federal Bureau of Investigation and the U.S. Department of Labor, Office of Inspector General, with the assistance of the Securities and Exchange Commission.  The case is being prosecuted by Assistant U.S. Attorneys Liam Brennan and Michael S. McGarry, and Special Assistant U.S. Attorney Sheldon L. Pollock.

Defendant: David Bryson

Crime: Conspiracy to Commit Wire Fraud

City and State: Ridgefield, Connecticut

Date: May 21, 2014

Sentence: 33 months of imprisonment, followed by three years of supervised release

Dollar Amounts: $5.8 million in additional fees, $46 million

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