Cincinnati money manager Glen Galemmo ran “an elaborate Ponzi scheme” that scammed more than $300 million from about 200 investors, according to a lawsuit filed against him in Hamilton County Common Pleas Court in Ohio.
Between 2006 and 2011, when the S&P 500 declined, Mr. Galemmo claimed to have earned a 432% return by investing in individual stocks, according to the lawsuit, which was filed by attorney Brian P. O'Connor of Santen & Hughes, who is representing two groups of investors.
The plaintiffs claim that Mr. Galemmo, his wife and his business partner, Edward Blackledge, used investor funds as “a cookie jar … withdrawing whatever they personally needed without detection or challenge,” the lawsuit said.
Mr. Galemmo is represented by Ben Dusing of Adams Stepner Woltermann & Dusing PLLC. Mr. Dusing was unavailable for comment.
The subject of two lawsuits, one filed July 20 and the other July 26, Mr. Galemmo was viewed by investors as a
hedge fund manager, but his methods weren't all that sophisticated. On annual K-1 forms, required for reporting each investor's share of income, he chronically avoided filling out the percentage of the managed funds belonging to that investor. On monthly update reports, the vast majority of the numbers reported were conspicuously rounded, often ending in zeros, according to the lawsuit.
Investors were first alerted to Mr. Galemmo's potential improprieties when he sent them a mass e-mail July 17 explaining that his business, Queen City Investments, would “no longer be in operation.” He further instructed investors not to come to the building, as they would not be allowed inside, and that he had been advised by legal counsel to avoid contact with any of his investors and that all inquiries should be directed to the
Internal Revenue Service.
“Chuck, Jared and I represent a large group of investors who've lost many millions of dollars,” said Mr. O'Connor, referring to Chuck Reynolds, who is also an attorney at Santen & Hughes, and Jared Levy of Dimond Kaplan & Rothstein PA.
“At this early stage, our goals are to undercover what money is still left, make sure that money is protected and investigate whether there are other parties who might have some liability in the case.”
