A Winnetka investment manager who lost more than $10 million in client wealth apparently fled the country and then sent videotaped confessions to his investors from a sailboat cabin somewhere overseas, according to federal lawsuits filed Wednesday.
In July 2001, Charles L. Harris, 43, founded the investment firm Tradewinds International II, which managed more than $10 million in a hedge fund for about 30 investors, according to a suit filed by the U.S. Securities and Exchange Commission.
Harris reported strong earnings from the fund until several investors requested an audit of the fund’s financial statements in November 2003, the suit alleges. Under mounting pressure to open his books, the suit states, Harris purportedly left the country and confessed to making failed investments that depleted the fund.
Harris explained the losses by directing some investors to a confession Web site and mailing others DVDs in which “Harris was shown inside the cabin of a sailboat, directly addressing the camera,” the suit stated.
“I’ve got a situation and it’s potentially developing worse,” Harris allegedly told one investor in a video confession. Through the recorded confessions, Harris told investors that he would be trading the fund’s assets offshore for the next nine to 12 months to make back the losses, the suit states.
The SEC suit seeks an injunction barring Harris from any further investment of Tradewinds International II funds.
Two separate suits were filed by the Commodity Futures Trading Commission and the investment group Midd-Cities Partners. No attorney for Harris could be reached for comment. Attorneys for the fund’s clients declined to comment.