WASHINGTON(HedgeWorld.com)–The fraud case involving a hedge fund started by a 22-year-old college student out of his parents’ home and offered over the Internet came to a close this week.

Ryan J. Fontaine, and his Simpleton Holdings Corp., was found guilty of fraud and will end up paying disgorgement and prejudgment interest totaling US$29,837.31 in addition to a civil penalty of US$29,000. The U.S. District Court Judge Michael B. Mukasey also enjoined Mr. Fontaine from violating anti-fraud laws and barred him from associating with an investment adviser.

Mr. Fontaine consented to judgment without admitting or denying the allegations of the case. The Securities and Exchange Commission originally filed a complaint against Mr. Fontaine late last year Previous HedgeWorld Story. The agency alleged that as early as June 2002 Mr. Fontaine and his Signature Investments Hedge Fund deceived investors by telling them a number of falsehoods regarding the fund and its management.

Investors were allegedly told that Signature managed approximately US$250 million, Salomon Smith Barney was the fund’s sub-adviser and that KPMG LLP performed auditing services for Signature. Mr. Fontaine also was said to have told investors that the fund had above-average returns during its 13-year investment history.

The SEC says that Mr. Fontaine was able to raise at least US$29,300 from at least two investors in the fund. He allegedly used a web site, a prospectus and emails to drum up cash from investors and prospective investors.

SBarreto@HedgeWorld.com