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NYU senior Hakan Yalincak has named a second NYU student as one of several people he's identified to federal prosecutors in connection with the multi-million dollar investment scam that led to Yalincak's indictment in 2005, according to court documents.
A court filing by Yalincak's attorney in the criminal case says that Yalincak has told federal authorities of more than a dozen individuals he claims took part in the phony hedge fund scheme, through which he tried to defraud investors of almost $8.9 million from 2003 to 2005.
Other court documents obtained by WSN say that Yalincak's cooperation has provided the government with useful information regarding its investigation into the case. His allegations may have prompted federal officials to look into several individuals, the documents say, including Gallatin junior and former friend Cormac B. Meehan, to determine what, if any, involvement they may have had with the hedge fund scam.
Yalincak v. Meehan
In January, Yalincak filed a lawsuit against Meehan in U.S. District Court, claiming he benefited from the fraud and demanding $1.6 million as part of Yalincak's litigation efforts to recoup investor funds. The lawsuit alleges that Meehan performed clerical duties for the phony investment firm.
Peter Boorman, Meehan's lawyer, said his client denies the lawsuit's allegations. Meehan referred requests for comment to Boorman, who would not comment further.
In the lawsuit, Yalincak also claims that Meehan used a corporate credit card account for over $7,000 of personal purchases and lost $424,000 of investor funds through unauthorized financial trades.
In addition, the suit says that in 2003, Yalincak and Meehan used the Yalincak family's credit cards to spend over $13,000, the bills for which were paid with investor funds.
Boorman said his client is not part of any criminal investigation. The attorney said that Meehan said he has not been questioned by law enforcement.
In a statement, Yalincak said the two parties are discussing a settlement of the case.
"Both Mr. Meehan and I have agreed to resolve any differences amicably without any further litigation, and both parties have agreed that it is inappropriate to comment on the pending litigation," he said.
Others named
According to his attorney's court filing, Yalincak also named Daedalus CEO Matthew J. Thomas and Daedalus General Counsel Michael Legamaro to federal prosecutors as co-conspirators in the scheme.
U.S. Postal Inspection Service spokesman Tim Harrington said his office - which investigates financial fraud and is working with the FBI on this case - does not comment on active investigations. Harrington said, however, that the investigation may have other targets aside from Yalincak and his mother - the only two people charged in the case thus far.
U.S. Attorney's Office spokesman Tom Carson declined to comment on whom his office's probe is targeting, saying only that the investigation is ongoing.
According to Yalincak and media reports on the case, he and Thomas, a former New York fund-raiser, formed Daedalus in December 2003 to solicit investments from several businessmen by promising to invest their money in various financial markets.
Instead, prosecutors say the money was used for Daedalus employees' personal enrichment and was also the source of a false, multi-million dollar donation pledge to NYU.
The matter has since sparked several lawsuits and court filings. As part of an agreement with the government, Yalincak has filed numerous lawsuits to recover fraudulently obtained funds, which will be returned to the defrauded investors.
More lawsuits
A lawsuit filed by Yalincak against Thomas claims they formed the hedge fund as an elaborate scheme to cover up previous credit card fraud by using subsequent investors' money to pay off credit card debts, initial investors and a $21 million pledge to NYU.
In that lawsuit, Yalincak was awarded $695,350 after Thomas failed to file a response in court, according to court records.
Speaking on Thomas' behalf, Thomas' attorney, Harold James Pickerstein, said he does not comment on pending litigation. He said he was unaware of any investigation involving his client.
In February, two of the defrauded investors - Joseph Healey and Arthur Cohen - filed suit against Legamaro and his former law firm, Barack Ferrazzano Kirschbaum Perlman ' Nagelberg, LLP, according to court documents.
The lawsuit, which claims Healey and Cohen were contacted by FBI agents investigating the hedge fund as early as February 2005, details Legamaro's alleged involvement with Daedalus and the NYU donation.
In 2004, Yalincak and Legamaro, Daedalus' attorney, arranged the NYU gift on behalf of the Yalincak Family Foundation, multiple sources said.
Improper use of funds
In their lawsuit, Healey and Cohen claim that Legamaro and Yalincak used the Foundation, which public records show Legamaro established in Delaware in 2004, to make the NYU pledge, and then used the donation's publicity to solicit further investments.
In September 2004, NYU received $1.25 million as a down payment on the gift, which it used to construct the Yalincak Family Foundation Lecture Hall at 19 West Fourth St. The money was later discovered to have been fraudulently obtained after Yalincak's arrest launched an on going federal investigation of the Daedalus hedge fund.
Last month, WSN reported that NYU is seeking to retain almost $200,000 of the $1.25 million donation, despite the university's earlier statements that it would return any ill-gotten funds.
The investors' lawsuit also claims that their money was improperly used to purchase a Porsche Cayenne for Legamaro's then girlfriend. Prosecutors in the Yalincak case previously said Yalincak had purchased the Porsche for himself, although a copy of the vehicle title lists Legamaro's girlfriend as the customer.
Representatives for Barack Ferrazzano did not return calls from WSN.
Legamaro referred inquiries to Fred Felton, a spokesman for Legamaro's current law firm.
Felton said the firm believes the allegations are "completely baseless and without merit," and that he was unaware of any investigation involving Legamaro.
Attorneys for the investors said the lawsuit "speaks for itself" and declined to comment further.
In June 2006, Yalincak pleaded guilty to one count each of bank and wire fraud after he was arrested in May 2005 for his involvement with Daedalus.
Yalincak was jailed for 20 months while awaiting trial in a Rhode Island detention center until he was released on bail in January. He is scheduled to be sentenced today at 1 p.m. in New Haven, Conn.
