FORT LAUDERDALE, Fla. - Joseph Polichemi, chairman of Copol Investments Ltd., was arrested in Fort Lauderdale in connection with a Securities and Exchange Commission suit over the mishandling of a third of the $37 million in pension fund assets for the Chicago Housing Authority.
Mr. Polichemi, who was arrested in late August, is one of four defendants in the case. CHA investments in Copol Investments, which buys and trades so-called "prime bank instruments" - phantom securities that purport to be issued by leading international banks and guarantee unrealistic rates of return - accounted for $10 million of the fund's lost assets. SEC officials said the remainder of the missing money has not been accounted for.
Mr. Polichemi is accused of persuading John Lauer, former CHA director of risk management and pension benefits, to invest the CHA pension money in the bank instruments.
Mr. Lauer is accused by the SEC of diverting the assets from two CHA pension funds.
Chicago police and federal officials have filed no charges against Mr. Lauer so far.
