Reported by JONATHAN RANDLES and  BLOOMBERG

A former Jefferies Financial Group hedge fund manager who was sued for allegedly defrauding the fund out of more than $100 million is also facing a federal criminal probe.

Manhattan federal prosecutors are investigating Jordan Chirico and allegations by the fund, 352 Capital, that he knowingly invested its money in a Ponzi-like scam, said a person familiar with the matter, who asked not to be identified discussing the probe. Chirico has received a grand jury subpoena as part of an investigation, according to court papers filed in August in a separate civil matter involving him and 352.

The government probe marks an escalation in scrutiny of Chirico’s management of 352, which was part of Jefferies’ Leucadia Asset Management arm. Jefferies started winding down the fund over the summer, and 352 sued Chirico and others, alleging fraud, in July.

According to the suit, Chirico directed the purchase of a large quantity of bonds issued by WaterStation Management, a company that claimed to operate thousands of filtered water vending machines. His former employer claims Chirico knew these machines didn’t exist but continued to put 352’s money in the scheme in part to recoup his own investment.

Read full report: https://fortune.com/2024/09/13/ex-jefferies-financial-group-fund-manager-criminal-investigation-federal-probe-ponzi-scheme-scam/