Former Hedge Fund Manager Sentenced To 96 Months In Prison In Ponzi Scheme Case

[nitpicker]

https://www.justice.gov/usao-sdny/pr/former-hedge-fund-manager-sentenced-96-months-prison-ponzi-scheme-case

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, September 27, 2018

Former Hedge Fund Manager Sentenced To 96 Months In Prison In Ponzi Scheme Case

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL SCRONIC, the former manager of the Scronic Macro Fund (the “Fund”), was sentenced to 96 months in prison today in connection with his scheme to defraud the Fund’s 45 investors of more than $22 million.
(snip)

SCRONIC raised more than $22 million from 45 investors in the Scronic Macro Fund (the “Fund”) from April 2010 to the October 2017. SCRONIC told investors that the Fund had positive returns in all but one of the 22 quarters from January 2012 through June 2017, with the highest reported quarterly return being 13.4 percent in the fourth quarter of 2014. In reality, the Fund lost money in 28 out of 29 quarters of its operation, with a total net loss of about $15.7 million before commissions. The Fund’s only positive quarter was its first quarter of operation in 2010.

As a result of these trading losses, the total assets SCRONIC claimed the Fund had in each quarter far exceeded its actual assets. For example, SCRONIC sent account statements to investors that together showed total fund assets of $21.7 million as of June 30, 2017. In actuality, on that date, the combined balance of SCRONIC’s brokerage and bank accounts was just $102,376.

In addition to losing money on trades, SCRONIC used investor money for personal expenses. His personal expenditures averaged more than $500,000 annually, including monthly rent of $12,275 for his primary residence in Westchester, New York, mortgage payments on a vacation home in Stratton, Vermont, fees for multiple beach and country clubs, including a $30,000 payment to the Stratton Mountain Club in July 2017, and miscellaneous items charged to credit cards in amounts averaging more than $15,000 a month.

As of the summer of 2017, SCRONIC was unable to pay redemptions requested by Fund investors because he did not have sufficient funds on hand. He told investors seeking redemptions that he would pay redemptions only at quarter-end, that he was too busy and preoccupied with a relative’s medical condition to pay redemptions, and that he was unavailable to pay redemptions because he was on vacation. In some cases, SCRONIC ignored redemption requests.

In addition to the prison term, SCRONIC, 46, of New York, New York, was sentenced to 3 years of supervised release, and ordered to pay $22,026,427 in restitution to his victims.
(snip)

[TexasTowelie]

1. It appears that he had about seven years of living the good life with his scheme

so eight years in prison barely reaches he minimum for the harm that he caused. Lock him up.