#FUNDS NEWS OCTOBER 5, 2017 / 10:36 AM / A DAY AGO New York-area hedge fund manager charged with Ponzi fraud Jonathan Stempel NEW YORK, Oct 5 (Reuters) - A suburban New York hedge fund manager who once worked at Morgan Stanley and was accused of losing or spending all but about $27,000 of the $21.8 million he told investors he had was criminally charged on Thursday with running a Ponzi scheme. Prosecutors said Michael Scronic, 46, of Pound Ridge, New York, stole more than $19 million from 45 investors he had lured since April 2010 to his Scronic Macro Fund by lying about his track record. Scronic, who has degrees from Stanford University and the University of Chicago, allegedly suffered losses in 28 of 29 calendar quarters, even as he reported largely positive returns on falsified account statements. Prosecutors said he also spent $2.9 million on himself over 5-1/2 years, including $180,000 annually on credit cards, fees for beach and country club memberships, and mortgage payments for a vacation home near Stratton Mountain in Vermont. A lawyer for Scronic could not immediately be identified. The defendant worked for Morgan Stanley from 1998 to 2005, including on an equities trading desk, court papers show. Morgan Stanley was not accused of wrongdoing. Scronic was criminally charged with one count each of securities fraud and wire fraud. The U.S. Securities and Exchange Commission filed related civil charges. Authorities said Scronic used some new money to repay earlier investors, but as cash became tight this summer refused to honor some investors’ redemption requests. According to court papers, Scronic had emailed one of those investors in November 2015 that “what’s cool about my fund is that i‘m only in publicly traded options and cash so any redemptions are met within 2 business days so if you do need to withdraw for your business needs it will be quick and painless.” Authorities said it proved otherwise. They said Scronic blamed a vacation, a relative’s medical condition, email issues, and a new quarterly redemption policy for refusing the investor’s Aug. 8 redemption request. As of Monday, that investor was still waiting for his money, court papers showed. (Reporting by Jonathan Stempel in New York; Editing by Tom Brown) http://www.reuters.com/article/new-...anager-charged-with-ponzi-fraud-idUSL2N1MG1GD
" Photographer: Michael Nagle/Bloomberg Fund Manager's Scam Targeted Well-To-Do Neighbors, U.S. Says By Bob Van Voris October 5, 2017, 11:02 AM EDT October 5, 2017, 7:04 PM EDT Michael Scronic defrauded at least 45 since 2010, U.S. says Scronic allegedly used money for rent, ski vacation home Almost 30 years ago, a teenage Michael Scronic helped make headlines in a tony New York suburb in a fight to force his high school to abandon a mascot some considered racist. Today, Scronic is the talk of the adjacent town of Pound Ridge after he was charged with ripping off friends and neighbors of $19 million in a Ponzi scheme. At least 45 people invested with Scronic over seven years, putting up anywhere from $23,000 to $2.4 million, according to federal prosecutors. Scronic claimed he had delivered double-digit returns and promised quick and easy access to their money, the U.S. said. Michael Scronic Source: Facebook.com “What’s cool about my fund is that i’m only in publicly traded options and cash so any redemptions are met within 2 business days so if you do need to withdraw for your business needs it will be quick and painless,” Scronic wrote to an unidentified investor on Nov. 12, 2015, according to court documents. “We’re going to put $100k in, as long as we can redeem within a couple days notice,” the investor wrote back. “I believe the agreement says 3 days, which is great.” Things didn’t work out as promised. Scronic used the investors’ money on risky bets on equity and index options and options on futures contracts, the U.S. said. He lost 88 percent of their deposits. Scronic also used investors’ money for personal expenses -- about $500,000 a year, the government said. That included $12,275 a month for rent on his Westchester County home, mortgage payments on a vacation house in Stratton, Vermont, fees for his beach club and country club, and credit card charges, according to the government. Redemption Request When investors came calling for their money, there was little left. Scronic told them on June 30 that his total assets amounted to almost $22 million. In reality, the balance in his account was less than $27,500, the U.S. said. One investor asked to redeem his $200,000 investment plus his purported gains. Scronic deflected, offered a series of excuses, and the investor still hasn’t gotten the money, the U.S. said. Scronic, 46, faces securities fraud and wire fraud charges and was also sued by the Securities and Exchange Commission. He was released from custody on a $500,000 after appearing in federal court in White Plains. Defense lawyer Robert Anello declined to comment. With 5,104 residents, Pound Ridge, about 47 miles (75 kilometers) northeast of New York City, is home to celebrities and money managers. Almost half the households had annual incomes exceeding $200,000, according to the 2010 Census. His wife Ashley is running for local tax receiver. A graduate of Stanford University who had a master’s degree from the University of Chicago, Scronic operated out of his Pound Ridge home, according to the government. The house has a pool and tennis court and is set back from the few neighbors in the area, according to an image on Google Maps. He worked for Morgan Stanley from August 1998 to October 2005, according to the SEC. Scronic began scamming clients from day one, when he launched what he said was the Scronic Macro Fund, the government said. It didn’t exist. Beginning in April 2010, Scronic reported positive returns in every quarter but one; he actually lost money in every quarter except the first, the U.S. said. The scheme collapsed when at least four investors tried to redeem $1.5 million beginning in June, they said. ‘Misleading Excuses’ “Scronic made a variety of misleading excuses” to an investor, the SEC alleged. After claiming it would take two weeks to process a redemption request, he ignored follow-up emails and then said his email had changed, the agency said. Scronic charged his clients 1 percent of their total investments and 20 percent of profits, prosecutors said. The criminal complaint lists four victims -- Victims A, B, C and D -- but doesn’t provide their names. Scronic attended John Jay High School in Cross River, New York, about six miles from Pound Ridge, where, as a senior, he took issue with the school’s Indian mascot, according to a 1989 article in the New York Times. He persuaded others to rally for the abolishment of the symbol, which he called racist. The campaign wasn’t successful. The case is U.S. v. Scronic, 17-mj-07351, U.S. District Court, Southern District of New York (Manhattan). — With assistance by Christie Smythe, and Matt Robinson" https://www.bloomberg.com/news/arti...nd-manager-charged-in-19-million-ponzi-scheme --------------------------------------------------------------------------------------------------- I hope he rots in prison .
I was going to say the same thing. This public case is NOT positive publicity for the top two universities that are known for their economics and finance programs. Well at least they taught him to be creative when coming up with excuses. "They said Scronic blamed a vacation, a relative’s medical condition, email issues, and a new quarterly redemption policy for refusing the investor’s Aug. 8 redemption request." LOL
Can't believe after Bernie Madoff, ppl are still pulling this same shit. Talking about being original.
I know of at least one person who got caught up in this kind of madness and ended up taking his life over it. I don't think these people start out intending to defraud and deceive, they just can't be honest upfront when shit starts going south and then it builds on itself.
My friend was invested with a firm about 9 years ago - it turned out to be a ponzi scheme. To me it seemed too good to be true so I stayed the hell away. It out there guys, be careful. These days with the low yields there are a lot scams popping up in the world of 'hard money' funds, note funds and real estate pooled investment funds.
Yep and literally everybody I have ever met online in regards to being a trader has ended up being completely fraudulent and full of shit. What a great industry, at least on the retail side.
Actually, as personalities go, the institutional side is probably worse. Actually, I think I have met the guy somewhere. What amazes me is none of these people have done their due diligence - starting from his track record and finishing with his admin setup.