A former hedge fund manager has been charged with defrauding investors in a federal indictment on Friday, nearly two years after the fund collapsed under the weight of failed real estate loans.

Lloyd Barriger continued to promise investors an 8 percent return as late as January 2008, even as the fund, Gaffken & Barriger, defaulted on a $20 million line of credit and held an increasingly delinquent portfolio, according to the indictment, which was unsealed on Friday.

In addition, the U.S. Securities and Exchange Commission issued its own charges against Barriger, claiming he had defrauded both investors in Gaffken & Barriger and in a second fund he managed, Campus Capital Corp. According to the SEC complaint, Barriger raised money from Campus to prop up Gaffken & Barriger without disclosing it to Campus investors.

Federal prosecutors are seeking a minimum of $1.07 million in forfeited assets, while the SEC is demanding that Barriger return all ill-gotten gains and pay civil penalties.

In the midst of the credit crisis, Barriger chose to lie about the solvency and liquidity of his fund rather than admit the somber truth of a collapsing business, said George Canellos, director of the SEC's New York Regional Office, in a statement. He continued to solicit new investor funds based on the same misrepresentations up until the day before the fund collapsed.

Barriger's attorney, Brian Dickerson of Roetzel & Andress, could not immediately be reached for comment.

The criminal case is U.S. v. Barriger, U.S. District Court, Southern District of New York, No. 11-cr-416.

The SEC case is SEC v. Barriger, U.S. District Court, Southern District of New York, No. 11-cv-111.

(Reporting by Joseph Ax, editing by Gerald E. McCormick)