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A fugitive hedge fund operator from Florida who allegedly scammed millions of dollars from investors that he used to pay for a lavish waterfront mansion and frolics with prostitutes has been arrested in Italy. Details of Donald C. O’Neill’s apprehension in Rome were not provided by the U.S. Attorney’s Office in Miami, which announced the arrest this week. O’Neill, 31, of Lighthouse Point, Fla., was indicted in secret in Miami last May on 40 counts of mail and wire fraud and money laundering in connection with a fraudulent investment scheme involving foreign currency exchange, or the so-called Forex markets. If convicted, he could face up to 40 years in prison and millions of dollars in fines and restitution. The U.S. Commodity Futures Trading Commission previously alleged that O’Neill’s primary victims were two Native American tribes. The Hopi Tribal Housing Authority and the Fort Mojave Arizona tribe lost $10 million in investments they placed with O’Neill, the CFTC said. O’Neill vanished the previous winter after being targeted in a 2002 civil action by the CFTC. When authorities couldn’t locate him for arrest, they asked U.S. District Judge Joan Lenard in Miami to unseal the indictment in hopes of smoking him out. Lenard ordered the case unsealed last August. O’Neill was president and owner of the Orca Common Enterprises — a group of funds that included the Orca Fund and specialized in ostensibly selling investments in foreign currency futures and options. He held himself out as a hedge fund manager from a suite on the 16th floor of the Broward Financial Centre, the same building that houses the U.S. Attorney’s Office in Fort Lauderdale. Authorities have identified two other entities he controlled, Frecom Currency Traders Group and Momentum Trading Group Ltd. Between January 2001 and September 2002, authorities allege, O’Neill raised $13.7 million from more than 38 investors. “As part of the business, Donald C. O’Neill directly and indirectly solicited individuals and various other entities to invest in the various funds he controlled, including those that purportedly invested in Forex transactions,” according to a news release issued by the U.S. Attorney’s Office. The Hopi Indian tribe had planned to spend earnings from the fund to build affordable homes on the reservation, fence vegetable fields and pave some parking spaces for the tribal motor pool. According to the indictment, O’Neill sold membership units in the Orca Fund to the general public by making cold calls, advertising on Internet sites, conducting presentations at investor conferences and obtaining referrals. Of the $13.7 million O’Neill allegedly took in, only a small portion was actually invested in foreign currency and securities. The rest allegedly was diverted for O’Neill’s personal use to buy three luxury homes in South Florida, lavish trips to Las Vegas, automobiles, golf club memberships, jewelry, custom-made suits, Jet Ski watercraft and the services of prostitutes, according to prosecutors. In September 2002, O’Neill’s assets were seized by court order following the CFTC’s original complaint in U.S. District Court in Miami. A week before that complaint was filed, O’Neill’s wife divorced him. She cooperated with investigators. Last year, court-appointed receiver Gerald Wald sold O’Neill’s 6,609-square-foot home in Lighthouse Point for $2.53 million. The prosecutor assigned to the criminal case against O’Neill is Assistant U.S. Attorney David M. Buckner.

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