This story has been updated.
A hedge fund manager from Northern Westchester was arrested Thursday morning and charged with securities fraud and wire fraud arising out of his execution of a $19 million Ponzi scheme, authorities said.
Pound Ridge resident Michael Scronic, 46, will appear before U.S. Magistrate Judge Lisa Margaret Smith in White Plains federal court later in the day Thursday, announced Joon H. Kim, the Acting U.S. Attorney for the Southern District of New York and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation.
“Scronic’s alleged get-rich-quick scheme was, in fact, a plan to deceive investors, luring them into a false sense of security about their investments by overselling the reliability and success of the fund," Sweeney said.
Said Kim: “Michael Scronic allegedly stole more than $19 million from investors by lying about the performance of his investment fund, and then spent much of that money on his own lavish lifestyle."
A graduate of Stanford University and the University of Chicago’s business school, Scronic raised more than $19 million from 45 investors in the Scronic Macro Fund from April 2010 to the present, Kim said.
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, Kim said. 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, said Kim, who noted the fund’s only positive quarter was its first quarter of operation in 2010.
In addition to losing money on trades, Scronic used investor money for personal expenses, according to Kim. His personal expenditures averaged more than $500,000 a year since January 2012 and included monthly rent of $12,275 on his primary residence in Westchester, 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, Kim said.
Scronic is charged with one count of securities fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison.
Click here to sign up for Daily Voice's free daily emails and news alerts.