PE pro pleads guilty to grand larceny

Lawrence E. Penn III, 43, pleaded guilty to grand larceny and falsifying business records before Supreme Court Justice Laura Ward in Manhattan, according to a spokeswoman for the Manhattan District Attorney’s office.

The Securities and Exchange Commission announced on Jan. 30 that it charged Penn and his firm, Camelot Acquisitions Secondary Opportunity Management, with stealing more than $9 million from fund investors, Reuters previously reported.

The SEC alleged that Penn used about $9.3 million from the fund to pay fake fees to Ssecurion, a company controlled by his longtime acquaintance, San Francisco-based Altura S. Ewers, who would then kick the money back to companies and accounts controlled by Penn.

Penn used the funds to rent luxury office space and pay commissions to third parties to secure investments from pension funds, according to the release.

Camelot’s auditors began to become suspicious of the fees in 2013 after Penn and Ewers lied and forged documents in order to cover up their scheme, according to the SEC.

“Penn held himself out as an ultra-sophisticated and well-connected investor in the private equity world,” Andrew M. Calamari, the director of the SEC’s New York Regional Office said in a statement. “Behind the scenes, Penn disregarded his obligations to the fund’s investors and treated their assets as his own personal and professional slush fund.”

The SEC’s complaint, which was filed in a federal court in New York, charges Penn, two Camelot entities, Ewers and Ssecurion with violating U.S. securities laws. It seeks the disgorgement of ill-gotten gains with interest and applicable penalties.

Penn founded the private equity fund Camelot Acquisitions Secondary Opportunities LP in 2010, eventually securing capital commitments of roughly $120 million, according to the SEC. Camelot’s investments are primarily growth-stage private companies that want to go public.

(By Brendan Pierson and Amanda Becker; Editing by Lawrence Aragon for Buyouts)