Fund scam earns him 20 years

BY ROBERT E. KESSLER
STAFF WRITER

February 17, 2006

A convicted confidence man, whose arrest was aided by a former confidence man turned evangelical preacher, was sentenced yesterday to 20 years in prison, the maximum term, for running a $55-million hedge-fund scam.

In a rambling speech for more than an hour and a half, Derek Turner, a New Zealander who operated partly from Garden City, minutely detailed his life story, alternately blamed federal law enforcement officials and himself for his plight, and pleaded for a compassionate sentence from Judge Joanna Seybert in U.S. District Court in Central Islip.

But Seybert imposed the maximum sentence suggested under federal guidelines, saying, "The door swings both ways. ... I also have to have compassion for the victims." Seybert also ordered Turner to attempt to repay the $55 million to his victims.

Turner had said his past efforts in making good on financial losses in other ventures "demonstrated the capacity to do the right thing," and asked to be given a light sentence so he could better repay his victims.

Assistant U.S. Attorney Lawrence Ferazani in court scoffed at Turner's remarks, saying he had originally tried to implicate one of his victims as a co-conspirator and had not been honest with FBI agents as to the scope of his fraud and the number of victims when he claimed to be cooperating with investigators after he was arrested.

Turner's attorney, Joseph Conway of Mineola, declined to comment, except to say Turner would appeal. Ferazani declined to comment further outside of court.

Turner was arrested in Garden City in April on charges of running a phony hedge fund that promised investors yearly returns of up to 40 percent. In fact, prosecutors charged, Turner pocketed most of the money from the investors in New Zealand, Australia, the Caribbean and the United States.

Turner was caught through the work of Barry Minkow, a Californian who had served seven years in federal prison in the 1980s for masterminding the $300-million ZZZZ Best Co. fraud, involving a phony carpet-cleaning system.
Since getting out of prison, Minkow has worked as an evangelical preacher who also helps to expose confidence schemes.