Fugitive fund manager found in Greece

ATHENS (Reuters) -- A fugitive U.S. hedge fund manager who admitted defrauding investors out of millions of dollars was arrested in Greece on Monday, Greek police said on Tuesday.

Angelo Haligiannis, formerly president of New York-based Sterling Watters Capital Advisors LLC, was allowed to remain free while U.S. authorities prepare an extradition request, which could happen this week, police said.

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Haligiannis pleaded guilty to one count of securities fraud in a U.S. federal court in September 2005, admitting that he defrauded investors by issuing "materially false and misleading statements" over the investment performance of his fund, according to the U.S. Securities and Exchange Commission.

He was indicted in 2004 for "dramatically overstating" the assets under management and fund performance over four years to 2003, and bilking investors out of "tens of millions of dollars," according to court papers.

Haligiannis told investors his funds managed $180 million in 2003 and that the fund had achieved returns of 1,565 percent between 1996 and 2003, according to the indictment. Based on those claims, Haligiannis raised a total of $26 million from some 80 investors.

But the fund suffered losses of more than $17 million in 2000 alone. By January 2003, the firm had assets of less than $170,000 and "did virtually no trading whatsoever," the SEC said.

Haligiannis, who was free on bail after the guilty plea, failed to appear at a sentencing hearing in New York in January 2006 and was the target of an international manhunt.

A federal judge in New York granted the SEC a summary judgment in January 2007 against Haligiannis, requiring him to pay $15.6 million, plus a civil penalty of $15 million.

Athens police said Tuesday that Haligiannis said he would provide documentation that he was not guilty of the U.S. charges, however. He was barred from leaving Greece.

Representatives of the New York office of the U.S. Attorney and the SEC declined comment.