Head of 3 hedge funds faces fraud charges

Federal regulators Wednesday filed civil fraud charges against Edward Ehee, the head of three San Francisco-based hedge funds, accusing him of funneling millions of dollars from investors nationwide into his own mortgage payments, vacations and bank accounts.

At the request of the Securities and Exchange Commission, a federal court in San Francisco froze the assets of Ehee, 43, the two fund management firms he controls and the hedge funds -- Compass West Fund, Viper Founders Fund and Viper Investments.

The assets of Ehee’s wife, brother and father, who are said to have received thousands of dollars of investors’ money from him, also were frozen.

Ehee’s attorney, Izzy Ramsey, said he was reviewing the SEC’s complaint and had no immediate comment.

The SEC is seeking unspecified civil fines and restitution of allegedly ill-gotten gains.

It was the latest in a series of enforcement actions by the agency against hedge funds, which are high-risk investment pools that operate with minimal oversight by regulators and have been growing rapidly.

Fraud among hedge funds has been on the rise: The SEC has charged fund managers with defrauding investors of a total exceeding $1 billion in the last five years.

Although the Viper Founders Fund ceased operations in late 2002, Ehee continued to raise money for it as recently as last May, the SEC said.