Investment Fraud: MICHAEL SCRONIC Charged With Securities Fraud And Wire Fraud Arising Out of His Execution of a $19 Million Ponzi Scheme

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Westchester Hedge Fund Manager Arrested For Running A Ponzi Scheme

<h2>Westchester Hedge Fund Manager Arrested For Running A Ponzi Scheme<&sol;h2>&NewLine;<p>Joon H&period; Kim&comma; the Acting United States Attorney for the Southern District of New York&comma; and William F&period; Sweeney Jr&period;&comma; the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation &lpar;&OpenCurlyDoubleQuote;FBI”&rpar;&comma; announced that MICHAEL SCRONIC&comma; a hedge fund manager in Westchester County&comma; was arrested this morning and charged with securities fraud and wire fraud arising out of his execution of a &dollar;19 million Ponzi scheme through the Scronic Macro Fund&period; SCRONIC will be presented before United States Magistrate Judge Lisa Margaret Smith in White Plains federal court later today&period;<&sol;p>&NewLine;<p>Acting U&period;S&period; Attorney Joon H&period; Kim said&colon; &OpenCurlyDoubleQuote;Michael Scronic allegedly stole more than &dollar;19 million from investors by lying about the performance of his investment fund&comma; and then spent much of that money on his own lavish lifestyle&period; Hedge fund managers who lie to their investors and steal their money&comma; as Scronic is alleged to have done&comma; will always be in our sights as targets for federal prosecution&period;”<&sol;p>&NewLine;<p>FBI Assistant Director William F&period; Sweeney Jr&period; said&colon; &OpenCurlyDoubleQuote;Scronic’s alleged get-rich-quick scheme was&comma; in fact&comma; a plan to deceive investors&comma; luring them into a false sense of security about their investments by overselling the reliability and success of the fund&period; The FBI will continue to identify and investigate those who defraud investors&period; We ask anyone who has information related to investor fraud submit a tip at <a href&equals;"https&colon;&sol;&sol;tips&period;fbi&period;gov&sol;">https&colon;&sol;&sol;tips&period;fbi&period;gov&sol;<&sol;a>&period;”<&sol;p>&NewLine;<p>According to the allegations contained in the Complaint&lbrack;1&rsqb; unsealed today in White Plains federal court&colon;<&sol;p>&NewLine;<p>SCRONIC&comma; a graduate of Stanford University and the University of Chicago’s business school&comma; raised more than &dollar;19 million from 45 investors in the Scronic Macro Fund &lpar;the &OpenCurlyDoubleQuote;Fund”&rpar; from April 2010 to the present&period; SCRONIC told investors that the Fund had positive returns in all but one of the 22 quarters from January 2012 through June 2017&comma; with the highest reported quarterly return being 13&period;4 percent in the fourth quarter of 2014&period; In reality&comma; the Fund lost money in 28 out of 29 quarters of its operation&comma; with a total net loss of about &dollar;15&period;7 million before commissions&period; The Fund’s only positive quarter was its first quarter of operation in 2010&period;<&sol;p>&NewLine;<p>As a result of these trading losses&comma; the total assets SCRONIC claimed the Fund had in each quarter far exceeded its actual assets&period; For example&comma; SCRONIC sent account statements to investors that together showed total fund assets of &dollar;21&period;7 million as of June 30&comma; 2017&period; On that date&comma; the combined balance of SCRONIC’s brokerage and bank accounts was &dollar;102&comma;376&period;<&sol;p>&NewLine;<p>In addition to losing money on trades&comma; SCRONIC used investor money for personal expenses&period; His personal expenditures averaged more than &dollar;500&comma;000 a year since January 2012 and included monthly rent of &dollar;12&comma;275 on his primary residence in Westchester&comma; <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;category&sol;mortgage&sol;" title&equals;"mortgage" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"119">mortgage<&sol;a> payments on a vacation home in Stratton&comma; Vermont&comma; fees for multiple beach and country clubs&comma; including a &dollar;30&comma;000 payment to the Stratton Mountain Club in July 2017&comma; and miscellaneous items charged to credit cards in amounts averaging more than &dollar;15&comma;000 a month&period;<&sol;p>&NewLine;<p>In recent months&comma; SCRONIC has been unable to pay redemptions requested by existing Fund investors&period; Between June and August of this year&comma; four Fund investors requested redemptions totaling about &dollar;1&period;5 million&period; SCRONIC has not had sufficient funds on hand to pay these redemptions&period; He instead has told these investors that the Fund would pay redemptions only at quarter end&comma; that he was too busy and preoccupied with a relative’s medical condition to pay redemptions&comma; and that he was unavailable to pay redemptions because he was on vacation&period; In some cases&comma; SCRONIC ignored redemption requests&period;<&sol;p>&NewLine;<hr &sol;>&NewLine;<p>SCRONIC&comma; 46&comma; of Westchester County&comma; New York&comma; is charged with one count of securities fraud and one count of wire fraud&period; Each charge carries a maximum sentence of 20 years in prison&period;<&sol;p>&NewLine;<p>The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only&comma; as any sentencing of the defendant will be determined by a judge&period;<&sol;p>&NewLine;<p>Mr&period; Kim praised the investigative work of the FBI&period; Mr&period; Kim also thanked the Securities &amp&semi; Exchange Commission for its assistance in the investigation&period;<&sol;p>&NewLine;<p>In a related case&comma; the Securities &amp&semi; Exchange Commission brought a civil action today against SCRONIC in U&period;S&period; District Court in White Plains&period;<&sol;p>&NewLine;<p>The criminal case is being prosecuted by the Office’s White Plains Division&period; Assistant U&period;S&period; Attorney James McMahon and Special Assistant U&period;S&period; Attorney Daniel Loss are in charge of the prosecution&period;<&sol;p>&NewLine;<p>&nbsp&semi;<&sol;p>&NewLine;<hr &sol;>&NewLine;<p>As the introductory phrase signifies&comma; the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations and every fact described should be treated as an allegation&period;<&sol;p>&NewLine;

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