NEW YORK, Oct 5 (Reuters) - A suburban New York hedge fund manager who once worked at Morgan Stanley and was accused of losing or spending all but about $27,000 of the $21.8 million he told investors he had was criminally charged on Thursday with running a Ponzi scheme.
Prosecutors said Michael Scronic, 46, of Pound Ridge, New York, stole more than $19 million from 45 investors he had lured since April 2010 to his Scronic Macro Fund by lying about his track record.
Scronic, who has degrees from Stanford University and the University of Chicago, allegedly suffered losses in 28 of 29 calendar quarters, even as he reported largely positive returns on falsified account statements.
Prosecutors said he also spent $2.9 million on himself over 5-1/2 years, including $180,000 annually on credit cards, fees for beach and country club memberships, and mortgage payments for a vacation home near Stratton Mountain in Vermont.
A lawyer for Scronic could not immediately be identified. The defendant worked for Morgan Stanley from 1998 to 2005, including on an equities trading desk, court papers show. Morgan Stanley was not accused of wrongdoing.
Scronic was criminally charged with one count each of securities fraud and wire fraud. The U.S. Securities and Exchange Commission filed related civil charges.
Authorities said Scronic used some new money to repay earlier investors, but as cash became tight this summer refused to honor some investors’ redemption requests.
According to court papers, Scronic had emailed one of those investors in November 2015 that “what’s cool about my fund is that i’m only in publicly traded options and cash so any redemptions are met within 2 business days so if you do need to withdraw for your business needs it will be quick and painless.”
Authorities said it proved otherwise.
They said Scronic blamed a vacation, a relative’s medical condition, email issues, and a new quarterly redemption policy for refusing the investor’s Aug. 8 redemption request.
As of Monday, that investor was still waiting for his money, court papers showed. (Reporting by Jonathan Stempel in New York; Editing by Tom Brown)