A former hedge fund manager from Northern Westchester will spend nearly a decade behind bars after defrauding 45 investors out of more than $22 million through an elaborate Ponzi scheme that allowed him to live a lavish lifestyle.
Michael Scronic of Pound Ridge, the former manager of the Scronic Macro Fund has been sentenced to 96 months in prison, Geoffrey Berman, the United States Attorney for the Southern District of New York, announced on Thursday. Scronic was also sentenced to three years of supervised release and must pay $22,026,427 in restitution to his victims.
Scronic, 46, admitted to raising more than $22 million from his 45 investors between April 2010 and October 2017. Scronic continued to tell his investors that the fund had positive returns in all but one of the 22 quarters from January 2012 thorugh June 2017, even though in reality, Scronic Macro Fund was actually hemorrhaging money and had negative returns in 28 out of 29 quarters of operation.
As a result of these trading losses, the total assets Scronic claimed the fund had in each quarter far exceeded its actual assets.
During his scam, Scronic sent account statements to investors that together showed total fund assets of $21.7 million as of June 30 last year. In reality, 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, averaging more than $500,000 annually, and monthly rent of $12,275 for his Westchester home, and mortgage payments for a vacation home in Vermont. He also used investor funds for beach and country clubs, including a $30,000 payment to the Stratton Mountain Club in July last year.
Berman said that as of last summer, Scronic was unable to pay redemptions requested by investors because he lacked the funds.
He used many excuses, telling investors “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 simply ignored redemption requests.
Scronic, who graduated from Stanford University and obtained a master's degree from the University of Chicago, operated out of his Pound Ridge home since 2010 after working for Morgan Stanley from August 1998 to October 2005, according to the SEC.
As a senior at John Jay High School in Cross River in 1989, he was quoted in a story in The New York Times advocating for abolishing the high school's "Indians' nickname, saying it was racist.
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