The United States Attorney for the Southern District of New York has unsealed an indictment charging Donald LaGuardia with securities fraud, wire fraud, and investment adviser fraud in connection with his operation of a now-bankrupt New York-based investment firm, L-R Managers LLC. LaGuardia was arrested earlier this week in Lavallette, New Jersey.
Over several years, LaGuardia, the chief executive officer and co-founder of L-R Managers, allegedly misappropriated more than $1.5 million from private investment funds managed by the firm and used the money to finance his personal and business expenses.
According to the allegations contained in the indictment, from 2013 through 2017, LaGuardia solicited millions of dollars from investors for the LR Global Frontier Master Fund and two related feeder funds, which had a stated focus on investments in “frontier” markets in Latin America, Central and Eastern Europe, the Middle East, Africa, and Asia.
LaGuardia allegedly used investors’ money to finance L-R Managers’ payroll, rent for its office space on Park Avenue in Manhattan, and hundreds of thousands of dollars in charges on the firm’s credit card, among other unauthorized expenses. At least $191,000 of the misappropriated money went directly to LaGuardia personally.
By September 2015, L-R Managers faced substantial financial difficulties. During the time, one of the firm principals sent an email to LaGuardia and others at the firm stating that it would be “ethically troubling to accept money into the [Frontier funds] when [L-R Managers] can no longer support . . . payroll and mission critical services.”
A few days later, a new investor solicited by LaGuardia made a $2 million investment into the Frontier funds. Prior to this investment, he concealed his firm’s near insolvency from the investor and did not disclose that the Frontier funds had been paying substantial expenses for the firm, contrary to the representations in the funds’ offering documents.
LaGuardia was charged with one count of securities fraud, one count of wire fraud, and one count of investment adviser fraud, and faces a maximum sentence of 20 years in prison on each of the securities and wire fraud counts and a maximum sentence of five years in prison on the investment adviser fraud count.
LaGuardia is presumed innocent unless proven guilty.