Katz, recently appointed chairman of the Pennsylvania Intergovernmental Cooperation Authority (PICA) by Gov. Corbett, had $300,000 invested with Onsa, formerly of Bucks County and now residing in Florida. Onsa faces a criminal trial in October in New York, and commodities regulators sued him in federal court here in early April.
Katz's cautionary tale is one of friends investing with friends without doing due diligence beyond that - a major mistake when it comes to your hard-earned money.
(Let's hope he does better due diligence as the chairman of PICA, whose mission, according to its website, is to "provide oversight and guidance to the City of Philadelphia in order to foster sound financial planning and budgetary practices.")
Katz was introduced to Onsa through Dennis O'Brien, former speaker of the state House of Representatives. Onsa and O'Brien had grown up together in the Northeast, and they and several others had invested in what Onsa said was a commodities and futures hedge fund.
Along with the other investors, Katz gave money to Onsa, who promised he would make money "shorting" the stock market, or betting it would go down in price.
Had that actually been done with their money, the investors would have been millionaires, said another one of them, who declined to be identified for this column.
Onsa reportedly provided no financial statements or any transparency about what exactly he was trading. Instead, he allegedly lost everything.
After about a year, Katz decided to get out, dissatisfied with the lack of clarity about investment strategy, recordkeeping, or returns. He filed a complaint in Delaware Chancery Court in June 2008 in an effort to compel Onsa to open up the fund's net profits-and-loss statements for scrutiny.
But things had already begun to go wrong.
