Philip Baker, former managing director of the collapsed Chicago hedge fund Lake Shore Asset Management Ltd, pleaded guilty Wednesday for his role in what prosecutors called a $291.8 million worldwide fraud.
Baker, a Canadian citizen, admitted to one count of wire fraud, averting a trial scheduled to begin Sept. 19, according to the office of U.S. Attorney Patrick Fitzgerald in Chicago.
The 46-year-old Baker has been in U.S. custody since December 2009, six months after a 27-count indictment against him was made public. Baker had been living in Hamburg, Germany at the time and was arrested there in July 2009.
Under a plea agreement, prosecutors will recommend the maximum 20 years in prison. Baker will also pay about $154.8 million in restitution. Sentencing is scheduled for Nov. 17 before U.S. District Judge John Darrah in Chicago.
Robert Henoch, a lawyer for Baker, did not immediately respond to a request for comment.
According to the plea agreement, Baker from 2002 to Sept. 2007 obtained the $291.9 million from about 900 investors he fraudulently solicited to invest in commodity pools, for the purpose of trading futures.
Prosecutors said Baker advertised annual double-digit returns from some Lake Shore investments, reaching as high as 55.5 percent, when in fact he was hiding millions of dollars of trading losses.
They said he Baker diverted about $33 million for personal use by himself and another Lake Shore director.
The Commodity Futures Trading Commission won a court order in August 2007 freezing Lake Shore's assets and a receiver was appointed that October. More than $100 million has been returned to investors so far, Fitzgerald's office said.
The case is U.S. v. Baker, U.S. District Court, Northern District of Chicago, No. 09-00175.
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