A federal judge in Philadelphia "reluctantly" agreed yesterday to settlements between two early investors in a fund run by convicted Delaware County money manager Joseph S. Forte and the court-appointed official trying to recover money for all of Forte's defrauded investors.

The two investors, Allen L. Greenough and F. Gibbs LaMotte, will return an aggregate of $217,891, the amount by which their withdrawals exceeded their investments in the fund, which collapsed a year ago, when Forte could no longer attract money from new investors to pay off old ones.

Greenough and LaMotte so far are the only two of 41 "net winners" from Forte's fund to agree to return fictitious profits. The entire group was asked to return a total of $8.56 million.

At issue for U.S. District Court Judge Paul S. Diamond is whether Greenough and LaMotte also should have been required to return the principal they put into the fund, but received back over the years. Greenough invested $335,000 from 1997 to 2003. For LaMotte, that figure was $430,000 starting in 2001.

Total losses in the Forte Ponzi scheme were $35 million.

Lawrence T. Hoyle Jr., an attorney for the court-appointed receiver who is trying to recover money to be distributed on a pro rata basis to all Forte investors, intended to pursue both profits and principal, as allowed by Pennsylvania law.

However, Hoyle and the receiver, Marion Hecht, decided to forgo the pursuit of the principal when representatives of the Securities and Exchange Commission and the Commodities Futures Trading Commission said in a Nov. 24 meeting that they would fight such a move in court.

"Although the position of the SEC and the CFTC does not have clear legal support and denies Forte's victims a possible avenue of recovery, I will nonetheless reluctantly approve the Consent Orders," Diamond wrote in a memorandum dated this week.

Also attending that meeting Nov. 24, the day Forte was sentenced to 15 years in prison, was the receiver in the case of Tony Young, a Chester County investment manager accused by the SEC of running a Ponzi scheme that cost investors $23 million.

Diamond surmised in his memorandum that the SEC and CFTC, which filed civil charges against Forte in January and against Young in April, have a nationwide policy that claims for principal should only be asserted against investors who shared the perpetrator's criminal intent.

"Because the winning investors' returned principal is actually the losing investors' money, those losing investors could well view the position of the SEC and the CFTC as extraordinarily unfair," Diamond wrote.

Diamond said that he agreed to the deals with Greenough and LaMotte because he was convinced by Hoyle's assertion that fighting with the federal regulators in court would likely cost more than would be gained by a victory.

However, Diamond said, if more money were at stake than in the cases of Greenough and LaMotte, he might not have gone along with the settlements.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com