A federal judge in New York kept the assets of Santa Barbara-based Westridge Capital Management frozen March 3 while the FBI investigates its two New York-based principals for allegedly swindling more than $550 million from investors.

Officials remain tight-lipped about Westridge as well as Santa Barbara men James Carder and Mark Yeager, who apparently ran the day-to-day operations of the Santa Barbara-based company but are not accused of any wrongdoing. Westridge had 20 clients and $1.8 billion under management, Securities and Exchange Commission records show.

The sign at Westridge Capital Management’s offices on Carrillo Street was ripped off the door and a Santa Barbara Police officer greeted visitors on Feb. 26. Yeager, who was with a Santa Barbara police officer at the office, declined to comment.

“[Westridge] had received a call from an angry individual yelling about the company losing his pension money,” said Sgt. Lorenzo Duarte, a spokesman for the Santa Barbara police. Duarte said the report has been forwarded to the FBI.

On Feb. 25, FBI agents in New York arrested Paul Greenwood and Stephen Walsh, who were the principals of Westridge Capital Management and a cluster of related companies. The FBI charged the men with fraud while the SEC filed a parallel civil complaint accusing the pair and their companies of misappropriating more than $550 million.

Greenwood and Walsh controlled Westridge Capital Management, the SEC’s complaint said. Carder has been the firm’s chief compliance officer since 2007 and its president since 1983, SEC records show.

It’s not yet known what Yeager’s role in the firm was. Carder was not in the office on Feb. 26.

An FBI spokeswoman said she couldn’t comment on Carder or Yeager and added that federal law enforcement officials haven’t announced any charges against them.

Walsh and Greenwood have been released after posting bail of $7 million each. But a judge rejected their request to unfreeze their assets.

“The judge maintained the temporary restraining order [granted when Walsh and Greenwood were arrested] and maintained all the asset freezes, but has not ruled on a preliminary injunction” that would make the asset freeze more permanent, said David Rosenfeld, associate regional director of the SEC’s New York regional office.

The SEC froze the Greenwood and Walsh’s assets and investment activities after they allegedly took $21 million from the University of Pittsburgh and didn’t respond to its calls about the money. It alleges Westridge and the two men’s other firms ran a fraudulent investment scheme since 1996.

“Greenwood and Walsh have used client money invested in [WG Trading Investors, a sister company to Westridge Capital Management] as their personal piggy-bank to furnish lavish and luxurious lifestyles, which include the purchase of multi-million dollar homes, a horse farm, cars, horses and rare collectibles such as Steiff teddy bears,” the SEC complaint said.

The SEC and FBI actions came five days after the University of Pittsburgh and Carnegie Mellon University filed a civil suit against Westridge Capital Management in federal court. That suit had alleged the men misled the universities and lost them a combined $114 million.

The universities filed suit after the National Futures Association had audited Greenwood and Walsh Feb. 5. After the men didn’t cooperate with the audit, the regulatory agency suspended their futures trading licenses.

On Feb. 6, Greenwood and Walsh solicited the $21 million from the University of Pittsburgh, but then didn’t respond to the school’s requests for information about the money, prompting it to file its lawsuit.

Nearby investors

Many of the investors in Westridge were retirement funds for public workers. The closest to the Central Coast appears to be the Kern County Employees’ Retirement Association, or KCERA. In a letter to its members, the group said it had about $100 million invested with Westridge and demanded all of it back Feb. 13, when it broke off its business with Westridge.

“KCERA’s action was prompted by the National Futures Association’s decision to suspend Paul Greenwood and Stephen Walsh, who are principals of [Westridge] and WG Trading, due to their failure to cooperate with the NFA’s investigation and their failure to explain certain debts of WG Trading,” the letter said.

Officials at the group didn’t respond to calls requesting comment on how much of its account it may have lost.

The federal court in New York has appointed a receiver to distribute what’s left in Greenwood and Walsh’s companies to investors. But it’s unclear how much investors will recover or when they’ll recover it.

“The receiver first has to get in there and determine what assets are there,” the SEC’s Rosenfeld said. “He’s just started to get in there and do that work. At this point, there isn’t any time frame” for when investors might be repaid.

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