Defrauded Investors in “Life’s Good” Hedge Fund Ponzi Scheme Claim Fraud by Morningstar in Granting High Rating to Fund

Plaintiffs in this action invested several hundred thousand dollars of their retirement funds in a purported hedge fund organized and managed by defendant Robert Stinson, Jr. (Stinson).  Stinson was, in fact, operating a multi-million dollar Ponzi scheme.  On August 15, 2011, he pleaded guilty to various federal criminal charges.  Plaintiffs in this action are suing Stinson and the entities through which he operated for various counts of securities fraud and common law fraud.  More important, the Plaintiffs accuse Morningstar, Inc., which gave a “Five Star” rating to the hedge fund in which Plaintiffs invested, of, at best, acting recklessly and, at worst, knowingly facilitating Stinson’s fraud.  We summarize the investors’ complaint and provide relevant details from the earlier SEC enforcement action.

To read the full article

Continue reading your article with a HFLR subscription.