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by Mike Caswell

Prosecutors in California have reached a deal to recover $8-million from one of the men accused of aiding the international hedge fund fraud that included Vancouver Island resident Colin Heatherington. (All figures are in U.S. dollars.) An Irish citizen named Sean Ewing, who supervised Mr. Heatherington, has agreed to voluntarily make the payment. In return, U.S. prosecutors have agreed that they will not pursue criminal charges against him.

The government says that Mr. Ewing was part of a scheme run by Mr. Heatherington and German hedge fund manager Florian Homm. According to prosecutors, the men used hedge funds to manipulate several OTC Bulletin Board and pink sheets listings. They then dumped shares of those same companies, reaping millions in profits, according to prosecutors. Meanwhile hedge fund investors sustained losses of $200-million, according to the government.

Mr. Ewing's connection to the scheme, as described by prosecutors, comes from his time as chief compliance officer of Absolute Capital Management Holdings Ltd., the hedge fund manager where Mr. Homm and Mr. Heatherington worked. According to the government, he knew about the investments that Mr. Homm and Mr. Heatherington were making. He also knew that the values of the Absolute funds were massively overstated. Instead of acting on this knowledge, he allegedly helped conceal their activities. At the same time he made over 20 million euros selling shares of Absolute Capital (which was also publicly traded), prosecutors claim.

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