New York Attorney General Eliot Spitzer filed a lawsuit in New York State Supreme Court against hedge funds Samaritan Asset Management and Johnson Capital Management, alleging that the firms engaged in fraudulent mutual fund market-timing practices. The two firms and their principals, Edward T. Owens and Michael A. Johnson, are accused of flying "under the radar" of systems that monitor and detect mutual fund market timing by "piggybacking" - disguising their activities by attaching their trades to the accounts of retirement plans affiliated with Security Trust Co., a trust and banking company in Arizona, the suit alleged. Security Trust was ordered shut down in 2003, and two of its top executives pleaded guilty in 2005 in New York Supreme Court to criminal conduct related to market timing.
Mr. Johnson did not return a call seeking comment on the lawsuit. Contact information for Samaritan Asset Management could not be immediately learned.