29-Yr Old Hedgie Pleads Guilty to Fraud

29-year old "hedge fund" boss Frederick Scott pled guilty on Friday to fraud charges alleging his entire hedge fund operation was fictitious and that he bilked investors out of $1.3 million. He claimed to be the youngest African-American hedge fund manager in history and that his fund had $3.7 billion under management. And he didn't just stop at that:

Frederick Scott on Friday pleaded guilty to charges that he defrauded clients of $1.3 million, bilking them with a story of having risen from homelessness to the hedge fund world, and all before he turned 30 years old. Indeed, little if anything Scott told the victims of his ACI Capital Group was true, including claims that he managed $3.7 billion. In reality, Scott took the money he was entrusted with and used it to finance a lavish lifestyle, prosecutors said.

To make this all worse, it was an affinity crime a la Bernie Madoff, where Scott preyed upon fellow African-Americans with a schtick about how he rose from homelessness to become a hedge fund founder. In fact, he was just a con artist with a high school diploma.

Like so many other fraudsters, he stole client funds to live a lavish lifestyle. At the time of his arrest in June, prosecutors detailed where some of the money went:

The criminal complaint says that bank records show Scott withdrawing cash from an account that held client money and using client funds to purchase personal items at Louis Vuitton, the Apple Store, Starbucks, Fair Bail Bonds, True Religion Jeans, Tao Restaurant, the Hampton Inn SoHo and Dizzy's Coca-Cola Club.

He was so successful in this ruse that he was voted into Ebony magazine's Top 30 Under 30 in 2010 when he was only 26.

Here's what I don't get: you can't pretend you're not caught. You know that you're scamming people (especially when you don't even bother to enter a Not Guilty plea), and over and over again your clients have busted you in one lie or another. Why do you persist?

I can sort of understand why Madoff kept it up: his scam was on such an unprecedented scale that it was nearly impossible to unwind without well-monied heads rolling all over the Street. But this guy was a piker by comparison. How hard is it to just close up shop and take your medicine show on the road? Why wait around until you get arrested?

I honestly think these guys start believing their own bullshit. It definitely has to be some kind of pathology. Because any sensible person running a scam like this does his dead-level best to stay under the radar and knows when he's caught. Hell, even Allen Stanford tried to kick rocks to Antigua when the jig was up.

What do you guys think? Do victims make this sort of thing too easy (not that that's any kind of excuse)? They almost have to, or nitwits like this wouldn't be so plentiful, right? This asshat's LinkedIn page is still up, for crying out loud.