Stephen Walsh appeared before a federal magistrate this week along with Paul Greenwood.

Stephen Walsh appeared before a federal magistrate this week along with Paul Greenwood. According to charges filed by the Securities and Exchange Commission the men, while operating WG Trading Investors of Greenwich, Conn., were involved in conspiracy, wire and securities fraud. The complaint details actions back to 1996 and said the men promised investors that their money would be invested in a stock index arbitrage strategy.

“Instead, Greenwood and Walsh essentially treated their clients’ investments as their personal piggy bank to purchase multi-million dollar homes, a horse farm and horses, luxury cars, and rare collectibles such as Steiff teddy bears,” the SEC said.

The SEC obtained an emergency court order freezing the assets of Greenwood and Walsh as well as their companies: WG Trading Investors, L.P. (WGTI), which is an unregistered investment vehicle; WG Trading Company, Limited Partnership (WGTC), which is a registered broker-dealer located in Greenwich, Conn.; and Westridge Capital Management, Inc. (Westridge), which is a registered investment adviser located in Santa Barbara, Calif.After appearing in a Manhattan court Feb. 25 the men were released on $7 million bond.Also this week, the University of Pittsburgh and Carnegie Mellon University filed suit against the two men for using a total of $114 million in investments from those institutions. Earlier this month, the National Futures Association was unsuccessful in attempting to audit the actions of WG Trading Investors — an NFA member — and suspended the membership of Walsh and Greenwood. That attracted the interest of the universities, who contacted the Securities and Exchange Commission.Walsh, a 1966 graduate of UB, is listed among its “Donors of Distinction.” In 2001, he pledged $250,000 to the UB athletics department. Later, the basketball office complex inside Alumni Arena was named after Walsh.When asked about his involvement with UB, the university released a statement: “Mr. Walsh has been an inactive member of our foundation board since March 2004. Furthermore, we have a policy that prohibits investing funds with any member of our foundation board.”Walsh was also listed as a former executive with the New York Islanders hockey team in the 1990s.