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Rams investor faces 500 years in jail


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- but dont worry it wont affect the club


ONE of the American businessmen who helped finance the takeover of Derby County could face a total jail sentence of more than 500 years if found guilty of multiple charges of fraud by a US court.

Jeffrey Martinovich has been charged with 26 counts of fraud.

  1. http://www.thisisderbyshire.co.uk/images/localpeople/ugc-images/275778/Article/images/17108160/4228624
    Jeff Martinovich

Each count carries a 20-year jail sentence.

Martinovich was one of four American investors who gave financial backing to the takeover of the Rams in January, 2008, by General Sports and Entertainment.

The 46-year-old managed a now defunct investment fund called MICG, which paid $5 million for 50,000 shares in General Sports Derby, the firm set up to run the club.

It is understood that the deal gave him a less than 10% stake in Derby County.

In February 2011 he filed for bankruptcy. Before then, Virginia-based Martinovich was banned from managing investments by US financial services regulator FINRA.

Now, the US Attorney's Office for the Eastern District of Virginia has confirmed that Martinovich has been arrested and appeared before a federal court, where he was charged with multiple counts of fraud relating to investments with a solar energy company.

They include charges of "mail fraud, wire fraud, bankruptcy fraud and unlawful monetary transactions".

Yesterday, Derby County said that the legal action against Martinovich would have no impact on the running of the club. The Rams said they stood by a statement they released last year when Martinovich filed for bankruptcy.

At the time, the club said: "He is not a director, has never been a director and does not have – and has never had – an impact on the running of the football club."

Derby County added that although, as a company, MICG once had a small shareholding in the club, Martinovich was not a shareholder as an individual.

In a statement issued by the Attorney's Office, it said Martinovich had been indicted by a federal grand jury over alleged fraud involving his mismanagement of a MICG hedge fund.

According to the indictment, in 2007, a year before he became involved with the Derby County takeover, Martinovich started three hedge funds through MICG and began seeking investments.

Acting on behalf of MICG, Martinovich bought about two million shares of a privately-traded solar energy company for the MICG Venture Strategies hedge fund.

At the end of each calendar year, in order to calculate the management and incentive fees he had earned as hedge fund manager, Martinovich needed to obtain an estimate of the value of the solar company shares held by MICG Venture Strategies.

Because the solar company was not publicly traded, MICG was required to seek an independent, external, valuation of the company's worth when calculating the management and incentive fees to be paid.

In the statement issued by the US Attorney's Office, it said: "The indictment alleges that in both 2007 and 2008, rather than seek this independent valuation, Martinovich fraudulently inflated the value of the solar company to falsely indicate an increase in the overall value of the hedge fund.

"Martinovich then allegedly used this fraudulent, unsupported, and inflated value of the solar company to convince new investors to invest in Venture Strategies, as well as to pay himself greater fees.

"The solar company eventually declared bankruptcy, resulting in serious financial problems for many Venture Strategies investors."

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