Bahamas-based New Zealander Derek Turner is in a New York jail facing fraud charges allegedly involving millions of dollars.
Turner, who described himself as a securities trader, was arrested by Federal Bureau of Investigation agents at his office in Long Island, New York, on April 16, it was reported today.
He is being held in the 1800-inmate maximum security Nassau County Correction Centre in New York, charged with defrauding hedge fund investors of US$1 million ($1.38 million). He has pleaded not guilty.
The charges carry a maximum sentence of 20 years' jail.
Turner's high-profile New York lawyer, Joseph Conway, said prosecutors plan more charges that would lift the total to US$4 million.
Mr Conway said Turner was "holding up well despite the situation" in prison.
The FBI alleges he swindled US$1 million from a father and son with the promise of 40 per cent annual returns. He told the pair he had US$500 million in the hedge fund, but it only contained US$300,000, according to court documents.
Mr Conway said prosecutors had indicated they had evidence suggesting US$4 million had been swindled.
Turner disputed this and said the money was still in the fund. If freed, he would be able to prove this, Mr Conway told the Dominion Post newspaper.
Mr Conway will apply for bail at a hearing tomorrow. The pair would then work on a strategy to fight the fraud charges, which will be heard in the federal court.
New York Newsday newspaper reported Turner was nabbed with the help of a former conman Barry Minkow, who uses his skills to track down swindlers.
Mr Conway said Turner's defence would focus on "interesting elements", such as the role Mr Minkow played in the investigation.
Newsday reported Mr Minkow, once convicted of a US$300 million share fraud but now running a company specialising in tracking down fraudsters, told the FBI of his suspicions about Turner's company, Turning International Ltd.
Mr Minkow recorded conversations with Turning International employees in which they discussed what profits could be made by investing in the fund.
The FBI has refused to comment on the role Mr Minkow played in Turner's arrest, or whether the agency uses conmen or reformed conmen in its work.
Mr Conway said Turner lived in the Bahamas with his Taiwanese-born wife, three children and three stepchildren. They had been living there since 2000 after Turner emigrated from New Zealand.
Neither the Foreign Affairs and Trade Ministry nor New Zealand police were aware of Turner's arrest, though spokespeople for both said this was not unusual.
- NZPA
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