(Updates with details from hearing, background on the case)
By Nate Raymond
NEW YORK, April 24 (Reuters) - Money manager and arts patron Alberto Vilar was resentenced on Thursday to 10 years in prison, a year longer than previously, in connection with his 2008 conviction for fraud and money laundering.
U.S. District Judge Richard Sullivan in Manhattan, who had imposed the original sentence, said a longer term was justified because Vilar had taken steps to prevent victims from being repaid. Two victims have died waiting to get their money back, he noted.
Sullivan also sentenced Gary Tanaka, Vilar’s business partner at the now-defunct Amerindo Investment Advisers Inc, to six years in prison for securities fraud and conspiracy charges, also a year longer than previously.
“I have to agree with the government, that the defendants’ conduct was designed at every step to punish investors, particularly those who testified against them at trial,” Sullivan said.
The longer sentences came after a federal appeals court last August ordered both defendants resentenced in light of an unrelated 2010 U.S. Supreme Court decision that affected how punishments should be calculated.
It is unclear whether the defendants will appeal the new sentences. Lawyers for the defendants declined to comment, though Vivian Shevitz, Vilar’s lawyer, at the hearing said claims he stood in investors’ way of getting repaid were “completely untrue and unfair.”
The proceeding likely ensures several more years of jail for Vilar, 73, who except for a year on bail has been incarcerated since December 2008.
Dressed in blue prison scrubs, Vilar chose not to make any statements during Thursday’s hearing. He had once donated millions of dollars to organizations including the Metropolitan Opera and the New York Philharmonic.
Prosecutors said that beginning in 1986, Vilar and Tanaka, 70, engaged in a fraudulent scheme investing in risky stocks against Amerindo clients’ wishes, and offering high returns by investing in a sham product in guaranteed fixed-rate deposits.
At its height, Amerindo had $10 billion under management, with investments in Microsoft Corp, Cisco Systems Inc , Intel Corp and other technology stocks.
Prosecutors contended that after the tech bubble bust in 2002, Vilar and Tanaka were in deep debt and stole client money to pay their bills.
The case largely centered on a single investor, Lily Cates, mother of “Fast Times at Ridgemont High” actress Phoebe Cates, who testified to being swindled out of $5 million.
At Thursday’s hearing, Sullivan also ordered a new set of financial penalties for Vilar and Tanaka, in light of a directive by the 2nd Circuit to recalculate how much they should pay in restitution and forfeiture.
Sullivan ordered Vilar and Tanaka to forfeit $20.6 million, down from the previous $54.4 million, and pay more than $20 million in restitution, down from the original sum of $34.9 million.
But the judge increased the amount of fines the Vilar and Tanaka must pay to a joint sum of $10 million. Fines last time were set at $25,000 for Vilar and $20,000 for Tanaka.
Sullivan has yet to decide how much to order Vilar and Tanaka to pay in penalties and disgorged gains in a related civil case by the U.S. Securities and Exchange Commission.
That regulator is seeking $21 million in disgorgement, to be offset by any amount ordered as restitution in the criminal case, plus $20.5 million in penalties.
The case is U.S. v. Vilar et al, U.S. District Court, Southern District of New York, No. 05-cr-00621. (Reporting by Nate Raymond in New York; Editing by Leslie Adler and Lisa Shumaker)