By Mary Fricker, The Press Democrat

Santa Rosa investors in the San Diego hedge  fund that collapsed in March amid allegations  of fraud may recover some of their money,  according to a new report filed with the U.S.  District Court in San Diego.

More than 200 investors nationwide, including  clients of a Santa Rosa investment company,  had feared their money was entirely gone.  But after four months of work by accountants  and court officials, it now appears some money  will be available to return, although the  amount is not yet known.

``I cannot now calculate a specific percentage,  but it appears that investors will recover  some percentage of their losses,'' receiver  Charles La Bella said last week in a report  to the court that appointed him to operate  the troubled fund.

The news was welcomed cautiously in Santa  Rosa, home of Zenith Capital LLC, which placed  money from about 60 clients with the Global  Money Management hedge fund.

``We've been saying all along that investors  will get money back. We're not sure in this  first initial phase how much that will be,''  said Rick Tasker, president of Zenith Capital.

The San Diego hedge fund was seized in March  by the Securities and Exchange Commission,  which filed a complaint in U.S. District Court  in San Diego accusing the fund and its manager,  Marvin Friedman, of securities fraud.

The fund had been telling investors that  they had more than $100 million in their accounts,  but the SEC found only $20,000.

Friedman denied any wrongdoing and accused  others of causing the losses.

The news stunned investors, including the  Zenith Capital clients who had put about $32  million in the fund since 1999. Of that amount,  $9.8 million came from investors in Sonoma  County, Tasker said.

La Bella put Global into bankruptcy and urged  investors to be patient as he and forensic  accountants attempted to trace the missing  funds, in spite of records he said were in  disarray.

He filed his second interim report last week  to tell how his investigation is progressing.  It is also posted at his Web site, www.gmmreceiver.com.

``These observations and findings are preliminary  and may change as more information is developed  ... but the focus has improved dramatically,''  La Bella said in the report.

He said he had located investment assets  with a potential value of $8 to $10 million.  In addition, almost $3 million may be recoverable  from three fund officials who are cooperating  with the investigation.

La Bella said he plans to go after any money  Global paid out as part of the alleged fraud  or in an effort to hide money from the bankruptcy  court. He said Global made ``significant transfers''  to insiders and investors that he plans to  examine.

Painting the first public picture of how  Global operated, La Bella said Friedman --  who controlled every aspect of the fund's  trading operations -- apparently did minimal  traditional research on companies. He kept  no notes, and relied on his instincts. He  sat at the head of a trading desk in San Diego  ``barking'' out instructions to several traders  in Global's trading room.

On heavy days, Global processed 100 to 150  trades. These trades were handled mainly by  Spear, Leeds & Kellogg brokerage firm  in New York.

Friedman often told people he'd never had  a bad day in the market, but there's little  evidence that his trading was ever truly profitable,  La Bella said.

Other findings in the report:

* Approximately 267 investors put $118.1  million into the hedge fund between 1994 and  2004, and about $60.3 million was returned  to investors, based on preliminary estimates.  That leaves $57.8 million of investors' initial  investments unaccounted for.

* Global's claim that it held more than $100  million and enjoyed 1,700 percent returns  over 10 years were ``grossly inflated.''

* Global invested about $10 million in several  companies, and two -- Santarus Inc. and Highcrest  Partners LP -- were successful. They may return  $8 million to $10 million to Global, depending  on market conditions.

* The value of the other investments, including  a $350,000 investment in Zenith Capital, is  uncertain.

Another report likely will be made in about  60 days or sooner.