Friday, October 6, 2017

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Westchester hedge fund manager accused of running Ponzi scheme

WHITE PLAINS – A hedge fund manager from Westchester County was arrested on Thursday and charged by federal prosecutors with security fraud and wire fraud stemming from a $19 million Ponzi scheme through the Scronic Macro Fund.

Michael Scronic, 46, allegedly stole more than $19 million from investors by lying about the performance of his investment fund, and then spent much of the money on his own lavish lifestyle.

Scronic raised more than $19 from 45 investors in the Scronic Macro Fund from April 2010 to present. He told the investors the fund had positive returns in all but one of the 22 quarters from January 2012 through June 2017m with the highest reported quarterly return being 13.4 percent in the fourth quarter of 2014.  In reality, the feds said the fund lost money in 28 of the 29 quarters of its operations, with a total net loss of about $15.7 million before commissions.

In addition to losing money on trades, Scronic allegedly used investor money for personal expenses. His personal expenditures averaged more than $500,000 a year since 2012 and included monthly rent of $12,275 on his primary residence in Westchester County, mortgage payments on a vacation home in Stratton, Vermont, fees for multiple beach and country clubs, including a $30,000 payment to the Stratton Mountain Club in July of this year, and miscellaneous items charged to credit cards in amounts averaging more than $15,000 a month.

Scronic is charged with one count of securities fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison.

 


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