U.S. regulators have charged a money manager with fraud, alleging that he concealed major losses suffered at the hands of the Bernard Madoff scandal from his clients.

The U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) both announced that they have brought emergency actions in the U.S. District Court for the Northern District of Illinois to freeze the assets of Nikolai Battoo, and various companies he controls. The companies include BC Capital Group S.A., BC Capital Group International Limited, BC Capital Management LLP, and BC Capital Group Holdings S.A.

The SEC alleges that Battoo, who it says claims to manage $1.5 billion on behalf of investors around the world, suffered major losses in 2008 due to his investments in the Madoff Ponzi scheme and a failed derivative investment program. Yet, it says that, rather than admit the losses to investors, Battoo has been overstating the value of his investments to investors. The allegations have not been proven.

Additionally, the SEC’s complaint claims that as investors began seeking redemptions, Battoo has offered several false explanations for not paying them. “Originally, Battoo claimed that the significant exposure of some of his investment portfolios to the MF Global liquidation prevented him from redeeming investments,” the SEC says. “More recently, Battoo has said that certain counterparties had frozen the assets he manages based on investigations by U.S. government agencies, and that his attorneys were negotiating a ‘release’ with the SEC.”

Yet, the SEC says that prior to filing this complaint, Battoo’s assets were not frozen and he was not negotiating any release with the SEC. It says it has now sought the freeze order to prevent additional harm to investors.

The CFTC says that its action also seeks an order appointing a receiver for the companies, prohibiting them from destroying books and records, and granting the regulator immediate access to evidence.

“Battoo attracted quite a following of investors by proclaiming his investments withstood the test of the financial crisis, but reality seems to have finally caught up with him,” said Robert Khuzami, director of the SEC’s division of enforcement. “Now, Battoo is offering investors one excuse after another for holding their money hostage.”