A former hedge fund chief financial officer pleaded guilty Tuesday to siphoning more than $3 million from his employer through phony invoices and secret corporate credit cards, federal prosecutors announced. Theodore Woo, 49, of Miami, admitted to a single count of securities fraud tied to a scheme that authorities say began shortly after he was hired and continued until his firing in March.
According to the Department of Justice, Woo entered his guilty plea before U.S. Magistrate Judge Valerie Figueredo in Manhattan. He is scheduled to be sentenced November 18 by U.S. District Judge Lewis A. Kaplan, and the securities fraud charge carries a maximum statutory penalty of 20 years in prison. As reported by US Attorney SDNY, the case was announced the same day as another major SDNY white-collar prosecution.
Fake Invoices and a Corporate Card for Personal Use
Investigators say Woo diverted fund transfers into bank accounts he controlled by submitting fake invoices for so-called “research consulting services,” a mechanism detailed by Investment Executive. Those phantom bills went undetected by the fund's internal financial controls for years, according to the outlet's reporting.
Beyond the invoice scheme, the Department of Justice says Woo opened and controlled multiple credit cards in the hedge fund's name, running up thousands of dollars in unauthorized personal charges. Those expenses reportedly included visits to adult entertainment establishments and international vacations, with the credit card bills paid directly using fund assets.
Investigators Call Him a Systematic Cheat
U.S. Postal Inspection Service Inspector in Charge Ketty Larco-Ward, who led the joint probe alongside the U.S. Securities and Exchange Commission, did not mince words about the scale of the deception. “Woo systematically cheated his employer out of millions and treated company funds as his own personal piggy bank,” she said, per the Justice Department's announcement.
U.S. Attorney Jamie McDonald also weighed in on the case in a post from the SDNY office. “Lies and deception do not pay, and this Office is committed to holding C-suite executives accountable when they engage in fraud,” McDonald said. The scheme ran for years before the hedge fund dismissed Woo in March, five months before the criminal charge was filed.
Prosecutors, Task Force Behind the Case
The prosecution is being led by Assistant U.S. Attorneys Sarah Mortazavi and Christy Slavik of the SDNY Securities and Commodities Fraud Task Force, the unit that handles Manhattan's highest-dollar financial fraud cases. The same day Woo's plea was announced, SDNY prosecutors also secured a four-year prison sentence for former real estate developer Joshua Schuster in a separate $13 million investor fraud case, underscoring how active the district's white-collar enforcement efforts have been this year.
Because Woo pleaded guilty via a charging Information rather than facing an indictment, the case moved quickly from charge to conviction. What remains unresolved is how much restitution victims will ultimately receive and whether the SEC will pursue separate civil action seeking disgorgement or monetary penalties — questions that are likely to come into sharper focus at Woo's November sentencing.
The case adds to a string of recent financial fraud prosecutions in the New York area. In Hoodline's prior coverage of a similar case in July, another New York investment manager admitted to personally misusing capital from a $50 million private equity fund.
