View imageA San Francisco-based hedge fund manager pleaded guilty Tuesday to a fraud that cost investors about $8.3 million between 1998 and 2007, according to the U.S. Department of Justice.

Alexander Trabulse, 62, of Colma, Calif., was arrested in January for mail fraud and pleaded guilty to the charges.

Trabulse managed two San Francisco hedge funds – Fahey Hedge Fund and Fahey Financial Group Inc. – and admitted to periodically mailing fraudulent account statements to clients that exaggerated their investment returns and account balances, according to the Department of Justice.

By 2006, 165 investors had invested $17.6 million in principal with Trabulse’s funds. He led them to believe their investments were worth a total of $50 million, but in fact they were worth tens of millions of dollars less, according to the DOJ.

Trabulse posted bail after his arrest in January and has been out of custody since. He will appear in federal court in San Francisco on March 9 to enter a plea agreement.

Mail fraud carries a maximum sentence of 20 years in prison and a fine of whichever is greater: $250,000, or twice the gross gain or loss, plus restitution.

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