Officials said, Michael Berger, who headed the Manhattan Investment Fund Limited, lost the lion's share of the $575 million invested in the fund through speculative trades, and then concealed the losses from investors.

US Attorney Mary Jo White said Berger lost the money "by pursuing a contrarian, `short-selling' strategy in technology and Internet-related stocks, and then concealed those losses from investors and potential investors by falsely representing that the hedge fund had positive returns."

The fund had more than 300 investors since its inception in 1995, and officials said the false representations helped attract new investors.

Authorities said Berger supplied false account statements to an affiliate of Ernst and Young in Bermuda that served as an administrator of the hedge fund, and those statements led to an incorrect calculation of the fund's value.

The losses were also concealed from the fund's auditors of Deloitte and Touche in Bermuda. Berger, a resident of New York, faces possible prison terms of 10 years for securities fraud.