DeWitt & Shrader to Pay $1.8M in Fraud Settlement

DeWitt & Shrader of Indianapolis, a firm that worked for convicted Ponzi schemer Keenan Hauke, has agreed to pay $1.8 million to settle a state lawsuit, the Indianapolis Business Journal reported.

Hauke, a money manager from Fishers who led hedge fund Samex Capital Partners, was convicted of securities fraud and sentenced to 10 years in prison in December 2011. DeWitt & Shrader served as the accounting firm for Samex from January 2006 until April 2011. The lawsuit contends the firm violated the Indiana Securities Act and committed negligence and fraud, as well as breach of contract, by failing to monitor Hauke’s bank accounts.

When the suit was filed against his firm in 2012, principal David M. DeWitt told the newspaper that he would fight it. He eventually agreed to settle. “Accountants or other licensed professionals who also hold securities licenses cannot afford to turn a blind eye if they see or suspect securities fraud,” Indiana Securities Commissioner Carol Mihalik said in a prepared statement. “They have an obligation to take action and in this case, they did nothing.” Hauke admitted to masking huge losses in the hedge fund he operated, and was ordered to pay $7.1 million in restitution. Total losses are estimated at more than $9 million.