Michael Hild, the founder, former CEO and controlling shareholder in Live Well Financial Inc., was arrested Aug. 29 in Richmond, Va., in connection with an alleged scheme to deceive Live Well's lenders by fraudulently inflating the value of its mortgage-backed bonds by over $140 million, according to a news release from the Department of Justice.
Due to the alleged scheme, Live Well was able to borrow money well over the value of the collateral it put up, Manhattan U.S. Attorney Geoffrey Berman said.
"In turn, Hild used these ill-gotten funds to gain control of the company and increase his own compensation by nearly 700 per cent, while exposing lenders cumulatively to $65 million in unsecured loans to the company, which is now in bankruptcy," Berman said. Live Well announced in May that it would cease operations and unwind.
Live Well's former CFO Eric Rohr and former head trader Darren Stumberger have also been charged for their alleged participation in the scheme. Both Rohr and Stumberger have pleaded guilty and are cooperating with authorities.
The Securities and Exchange Commission also charged Live Well and Hild with perpetuating the bond mismarking scheme against the company's short-term lenders and violating the anti-fraud provisions of the federal securities laws. The complaint also charged Rohr and Stumberger, both of whom consented to partial judgments against them.
In its report on Hild's arrest, Richmond BizSense said that Hild was arraigned and released on bond later on Aug. 29.
Citing an emailed statement from Hild's lawyers, Richmond BizSense reported that Hild "is deeply disappointed" that authorities responded to Live Well's business failure by alleging corporate fraud. They said Hild cooperated fully in the investigations by the SEC and the U.S. Attorney's Office.
Rohr and Stumberger were not arrested, according to the publication.
