Greenwich hedge fund controller accused of stealing millions

The controller of a Greenwich hedge fund has been arrested and charged with allegedly embezzling millions from the company.

According to the U.S. Attorney’s Office for Connecticut, Lawrence Herzing, 45, of Greenwich was arrested on federal charges on Wednesday after he allegedly embezzled millions of dollars from Contrarian Capital Management, LLC where he had been the controller. The U.S. Attorney’s Office claims that Mr. Herzing used his position there to wire funds from the business to accounts that he controlled on 32 occasions between 2004 and 2013. The complaint further charged that two of these allegedly fraudulent wire transfers totaled more than $2.4 million.

Mr. Herzing has been charged with wire fraud, an offense that carries a maximum term of imprisonment of 20 years. He was arraigned in federal court in Bridgeport and released on a $5.6 million bond. Authorities say that $2.6 million of that is secured by his Greenwich home.

Contrarian Capital Management, LLC is a Greenwich-based firm that was established in 1995 with offices in Paris, Brazil and Hong Kong in addition to its Greenwich corporate headquarters. On Thursday, the firm released a statement noting that Mr. Herzing no longer worked there. A date for his termination and whether or not it had anything to do with the allegations was not revealed, though.

“Upon discovery that a former employee misappropriated funds, Contrarian immediately commenced a review with outside advisors, reported the matter to the authorities and is cooperating fully with their investigation,” the company statement said. “The management company has made full reimbursement and has taken prompt action to enhance our internal processes.”

Additonally a person close to the situation told the Post that no current or former clients of the firm would be incurring any losses as a result of the incident. There was no information as to how much money is alleged to have been stolen from Contrarian but Bloomberg News pegged the number at $12 million on Thursday.

The charges were announced on Wednesday by Deirdre M. Daly, United States Attorney for the District of Connecticut, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation. In making the announcement, Ms. Daly stressed that the complaint is not evidence of guilt, only an allegation and that Mr. Herzing would have his day in court.

This matter is being investigated by the Federal Bureau of Investigation, with the assistance of the Greenwich Police Department. The case is being prosecuted by Assistant U.S. Attorneys Jonathan Francis and Heather Cherry.

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