Managers of Top Small-Cap fund Adirondack accused of Sham Transactions to Avoid Paying Millions

Two Albany, NY men who run a successful small-cap mutual fund are headed to trial next week in a case that started with allegations of self-dealing to steal equity interest in their company in order to get out of paying a founding partner millions. Matt P. Reiner and Greg A. Roeder, the investment officers of the Lipper award-winning Adirondack Small-Cap fund, have also been accused of hiding their own income from the IRS, front running investors in the fund, and running a fund that possibly sells investments without the licenses required by government regulatory agencies.

Two separate lawsuits for not paying people have been brought against the duo by men that have worked with them to market the fund and communicate with investors. They are Steve Gonick who is married to an well known Albany business women Denise Gonick that is CEO of MVP Healthcare. The other is an Albany native with two decades of experience in managing money for high net worth individuals named Louis Morizio. It’s the Morizio case that is finally going to trial after 8 years of litigation. Gonick got paid via a recent settlement in his case for an undisclosed amount. He now works with a non-profit with his high-powered wife bringing home the bulk of the family income.

Matt Reiner and Steve Gonick

The Adirondack fund was setup with a separate LLC called Adirondack Research & Management Inc. which is billed as the investment advisory for the fund. At the start of the business Roeder, Reiner, and Morizio all owned a third of the equity in it. The three founders put their own money in the fund and along with a few friends and family started with only $1 million. Then Morizio brought in his previous clients money and they had $7.4 million to put to work buying small cap stocks within a few months. Albany being an unusual location for a high performing mutual fund garnered lots of local praise from the Hearst-owned local newspapers giving the founders respect and name recognition that helped drive more people to want to invest in the fund. The funds current ADV form filed with the SEC says Roeder and Reiner now run around $360 million of money which includes $100 million in separate accounts. The most recent one year return for the fund is 8.24% but past returns have been as high as 44% in 2013. According to a person familiar with the fund’s partners Reiner and Roeder have made over 20 million dollars off the fund since inception. The third partner, Morizio, wasn’t so lucky.

Morizio is fighting to get paid for compensation which goes back to May 2006. In 2005 the Adirondack Small-Cap fund had good returns of 16.6%. Before starting the fund Reiner and Roeder were stock analyst for a local investment banking firm called C.I. King & Associates. The fund takes a 1.25% management fee which is less than a hedge fund that typical charges a 2%. Reiner and Roeder were the stock pickers and Morizio was the only one of the trio that held a brokers and investment adviser license which allowed him to solicited new people to invest in the fund.

Morizio was a stickler for compliance and following the securities laws. In 2006 he asked the board to hire an outside law firm to looking into Reiner or Roeder trading ahead of investors in the fund, which would be a breach of fiduciary duty. The board said no they didn’t want to spend the money. Then in 2010 there was an internal investigation led by Reiner’s cousin, Jarrod Becker, who is the current chief compliance officer and was a lawyer for a D.C. law firm before joining the fund. According to internal board notes from 2010 seen by this reporter, Becker found that Roeder had bought stock in his personal account ahead of the fund buying the stock on two occasions. This industry term for this is front-running and it’s a violation of securities law. One of those stocks was Coeur d’Alene Mines. Becker wrote in his report about reviewing Matt Reiner’s trades, “I have not looked at the time stamps for the Coeur d’Alene Mines trade, because Mr. Reiner would have to dig deeply into his archive records” Becker did not return a request for comment about why he didn’t want to dig in deeper to look at Reiner’s trades. Becker did note in his report that Roeder paid the firm back the profit he made trading ahead of his investors. It is unclear if additional internal inspections of the managers personal trades have been done since then.

According to the complaint and Roeder and Reiner’s own emails, the duo hatched ​a plan to dilute Morizio and push him out of the company behind his back with the hope of stealing his client’s investments. They asked Morizio to contribute more in capital, in excess of $10,000 when, according to the papers, they already owed Morizio money for his past services. This additional contribution was to maintain their equal ownership in the company while issuing additional shares to Steve Gonick, a minority shareholder at that time.

Morizio declined to pay money to the company when it owed him money. Meanwhile, Roeder and Reiner, apparently without Morizio’s consent or knowledge, took more equity in the company and diluted Morizio’s ownership interest by deferring money they were allegedly owed rather than contributing money. Yet they did not allow Morizio to do the same thing they were doing.

​T​his diluted Morizio’s equity from 31.67% to 18.75%. But it wasn’t till Morizio officially filled a lawsuit accusing them of breach of contract for unpaid services in New York state court that he was granted discovery and ​learned that Roeder and Reiner didn’t really pay any additional capital because they just engineered ​the sham ​​​​transaction.

Roeder and Reiner , who have much deeper pockets than Morizio, hired a big guns Albany attorney named James Hacker of Jones, Hacker, & Murphy LLP. Court docs show Hacker was successful in delaying discovery and dragging out the case to burden Morizio financially in a likely attempt to get him to quit the lawsuit. Hecker outmatched Morizio’s first two lawyers who either didn’t understand the complicated financial transactions or just dropped the ball which lead to Morizio getting some of his claims thrown out by a local state Judge named Richard Platkin. But he didn’t quit the lawsuit.

When Morizio finally found Albany-based attorney Matt Wagoner of the Wagoner law firm to take the case on contingency a series of damaging information came to light via testimony and newly disclosed documents. Unfortunately an amended complaint to included this alleged fraud and what appears to be out right theft wasn’t allowed by Judge Platkin. That decision is now with the state appeals court. The judge basically wrote in his decision while Morizio might have substantiated claims there are consequences to delays in litigation and used his judicial discretion to deny the new disturbing facts to be litigated in his courtroom.

At trial next week Morizio’s remaining claim will be over a legal term called quantum meruit. That means a jury will have to deiced what is the value of the services rendered by Morizio while he worked for the fund. If a plaintiff in a case can prove there’s “evil or reprehensible” motive then punitive damages could be allowed but with only a quantum meruit claim that’s not likely to happen.

The local media in Albany, whose written multiple pro biz stories on the fund, have virtually ignored this lawsuit which is a matter of public records and an important public service for main street investors in a mutual fund to know. Steve Gonick will be testifying for the Plaintiff about things the Adirondack guys did so it’s not like the local reporters don’t have an interesting local story to report.

Emails to the fund’s managers with a request for comment on the evidence in this case were not returned. Attorney Matt Wagoner would not comment on the case. James Hacker did not return an email for comment as of press time.


Enter your email address to subscribe to and receive notifications of new articles by email.


  1. Did Sichenzia Ross close? I can’t access their website.

Share Your Voice

This site uses Akismet to reduce spam. Learn how your comment data is processed.