The manager of a New Jersey hedge fund allegedly used $4 million in investor funds to fund a luxury lifestyle of cars, vacations and jewelry.

Nicholas Lattanzio, owner and manager of the Black Diamond Capital Appreciation Fund, a New Jersey hedge fund, was arrested and charged with allegedly orchestrating an advance fee scheme, announced U.S. Attorney Paul J. Fishman.

Lattanzio, of Montclair, N.J., faces three counts of wire fraud and two counts of securities fraud before the U.S. District Court of New Jersey in Newark.

In a parallel civil action, the Securities and Exchange Commission announced securities fraud and investment advisor fraud charges on Wednesday, seeking disgorgement fees and civil penalties.

Lattanzio allegedly promised an Atlanta hotel developer and a New York energy company that he would arrange project financing for them and generate returns on money they invested in his fund, telling them that they could withdraw their money if the financing didn’t materialize. He also promised that his fund had as much as $800 million under management and a track record of double-digit returns.

Fishman alleges that from June 2013 to November 2014, Black Diamond Capital Appreciation Fund and several other related entities collected $4 million in upfront fees from the companies and about $1 million from other investors in exchange for the promise of future loans or investment opportunities that never materialized.

Instead of investing the victims’ money and providing the loans, Lattanzio allegedly stole the majority of the funds and used them for personal expenses, including the purchase of a $1 million home, a $124,000 Land Rover, $100,000 in Tiffany jewelry, $570,000 in cash or checks written to himself or his girlfriend, and a payment of hundreds of thousands of dollars in credit-card debt he incurred for other expenses, which included a $24,000 family vacation to Hawaii and $50,000 for tickets to the New York Yankees.

According to the criminal complaint, Lattanzio misled his victims into believing their investments were safe and did not disclose his spending to them.

“Lattanzio masqueraded as a sophisticated hedge fund manager to capitalize on small businesses’ legitimate need for financing,” said Andrew Calamari, director of the SEC’s New York Regional Office. “He falsely reassured his investors they were earning profits while he was swiping their money to bankroll his affluent lifestyle that he otherwise could not afford.”

Furthermore, the SEC alleges that Black Diamond Capital Appreciation Fund never had more than approximately $5 million in assets, far less than the $800 million claimed.

Fishman alleged that the energy company eventually asked Lattanzio to withdraw their money, but to date has not received any of it back.

The wire and securities fraud counts each carry a maximum potential penalty of 20 years in prison and a fine of either $250,000 or twice the gain or loss from the offense. The criminal complaint also seeks forfeiture of the home Lattanzio purchased in Montclair, New Jersey, a 2013 BMW 650 and various pieces of jewelry.