Michael Scronic Pleads Guilty in Ponzi Scheme
Michael Scronic, who touted himself as the hedge fund manager of the unregistered Scronic Macro Fund, has agreed to a US Securities and Exchange Commission ban permanently blocking him from buying or selling securities. In a parallel criminal case, Scronic pleaded guilty to securities fraud that involved 45 victims in his over $22M hedge fund fraud. His victims who suffered significant investment fraud losses included acquaintances, relatives, and friends. According to Bloomberg, investors gave him amounts ranging from $23K to $2.4M to invest.
Prosecutors contend that Scronic lied about his investment fund’s performance, touting returns of up to 13% when, in reality, the fund suffered millions of dollars in losses. About $500K, also from investors, was used to fund his own expenses, including a $12K/month New York rental, mortgage payments on a Vermont vacation home, country club and beach club membership fees, and about $15K/month in credit card expenses. The investment scam went on from 2012 through June 2017.
Scronic orchestrated his fraud out of his rental home. Investors were charged a 1% asset under management fee and 20% of profits that did not exist. Instead, he allegedly placed investors’ funds in his own brokerage account while trading in high risk options contracts.
During his plea hearing, Scronic admitted that he fraudulently told investors that the hedge fund was profitable when that was far from the case. His criminal sentencing is scheduled for July. Scronic faces up to 20 years in prison for these ponzi scheme charges. As part of his plea agreement he must forfeit $22M.
Investment Fraud Losses
If you are an investor that has suffered investment fraud losses because of misrepresentations and omissions made to you that caused you to invest while preventing you from suspecting that you were the victim of a scam, you may have grounds for an investor fraud claim today. At Shepherd Smith Edwards and Kantas, LTD LLP, our hedge fund fraud lawyers represent high net worth individual investors, retail investors, and institutional clients in helping them to recover their investment losses. Contact our securities law firm today.
Read the SEC Complaint (PDF)
More Blog Posts:
Wedbush Securities Faces Failure to Supervise Charges Over Broker’s Pump-And-Dump Scam, Stockbroker Fraud Blog, March 28, 2018
Massachusetts Regulator Accuses ARO Equity of $5.8M Ponzi Scam that Bilked Seniors, Stockbroker Fraud Blog, March 26, 2018
Texas Securities Cases: Austin Investment Adviser to Pay Over $715K to Settle Cherry Picking Allegations and Dallas-Based Oil and Gas Company is Accused of $95OK Investor Fraud, Stockbroker Fraud Blog, March 9, 2018