Public pension plans and universities are trying to track down their money after the arrests of Paul Greenwood and Stephen Walsh

Public pension plans and universities are trying to track down their money after the arrests of two highflying fund managers for allegedly stealing up to $550 million from clients, the latest big fraud case to rock the investment world.New York money managers Paul Greenwood and Stephen Walsh, whose fund operation catered to large investors, are accused of looting client accounts to buy expensive homes, horses, rare books and collectibles including an $80,000 teddy bear, according to court documents.The two were arrested in New York on Wednesday and charged with criminal conspiracy and fraud. They have not yet formally responded to the charges in court, and are free on bail.Their lawyers have declined to comment.

Authorities say that in a scheme that lasted more than a decade, the men misused the bulk of the $667 million that clients had thought was invested in an "enhanced equity index" strategy.

A court-ordered freeze has been imposed on their personal assets and those of their affiliated companies, which include the WG Trading broker-dealer with offices in Connecticut, New York and New Jersey, and the Westridge Capital Management investment adviser in Santa Barbara, California.

The Sacramento County Employees' Retirement System in California, which had a portion of its portfolio managed by Westridge and WG Trading, said it was "cautiously optimistic that we will be able to recover a meaningful amount of our investment."

"Based on preliminary information, it appears that there may be a substantial amount of assets available in the WG Trading fund to repay investors, but without further information it has been impossible to determine if that is in fact the case," Richard Stensrud, the pension plan's chief executive, said in a letter to fund participants.