updated 6/6/2006 5:15:38 PM ET 2006-06-06T21:15:38

A former New York University student pleaded guilty to bank and wire fraud Tuesday, admitting he used his student ID and expertly forged documents to pose as the heir to a billionaire Turkish family and trick investors into pouring millions into a nonexistent hedge fund.

Prosecutors spent hours Tuesday describing how Hakan Yalincak, 22, charmed his way into the exclusive world of Greenwich high finance, shuttled counterfeit checks across the world and brokered deals with a Kuwaiti financier.

Yalincak’s fund, the Daedalus Capital Relative Fund I, wasn’t a legitimate investment and prosecutors said investors lost more than $7 million — a figure Yalincak said is overstated. Prosecutors say the money was spent on a Porsche, a Tiffany diamond and a $1.25 million donation to NYU.

The donation was used to reassure worried investors that the Yalincaks were investors who could be trusted, prosecutors said. Yalincak’s mother, who also faces fraud charges, even persuaded NYU’s development director to meet with prospective investors, prosecutors said.

NYU spokesman Josh Taylor said the development director spoke with two investors only to confirm that the Yalincaks had paid the first installment of what was to have been a $21 million gift.

The Kuwaiti businessman told the FBI that Yalincak’s mother claimed to be part of one of the world’s richest families. Other investors said they received financial statements showing the family’s net worth at more than $1 billion.

“This was all an attempt by the Yalincaks to establish their bona fideness to investors as a wealthy Turkish family,” prosecutor Calvin Kurimai said.

In reality, most of the money in the Yalincak accounts belonged to investors. When a few got suspicious and demanded their money back, prosecutors said they were paid with other people’s investments.

When he came up short, prosecutors said, Yalincak forged multimillion-dollar checks and passed them quickly through banks in Greenwich, New York and Switzerland, hoping to cash out before they caught on. When they froze the accounts, prosecutors said Yalincak blamed it on a mistake by the executor of his family’s estate.

“I just want to apologize to my family,” Yalincak said in court. “My actions during the course of this thing really hurt my mother, father and my sister.”

Yalincak’s plea deal with prosecutors does not recommend a specific sentence. He faces up to 50 years in prison when he is sentenced Sept. 19. Yalincak’s mother, Ayferafet, is scheduled for a fraud trial next month.

NYU said it will return the donation once a court determines whom the money belongs to.

“True philanthropy, like good business dealings, requires good faith,” the university said in a prepared statement. “Clearly that was lacking here.”

Yalincak, who has been detained since his arrest last year, was denied bail for a third time Tuesday.

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