A MAN OF ‘STEAL’
$19M ‘Ponzi scam’
FBI agents on Thursday arrested a New York man posing as a hedge fund investor on charges he ripped off at least 42 friends and acquaintances with a $19 million Ponzi scheme.
Michael Scronic, of leafy Pound Ridge, an affluent suburb north of New York City, lied to his investors about the performance of his so-called fund — and instead spent the money on a home in Vermont’s ski country, a beach house and country clubs, it is alleged.
“Michael Scronic allegedly stole more than $19 million from investors by lying about the performance of his investment fund, and then spent much of that money on his own lavish lifestyle,” acting Manhattan US Attorney Joon Kim said Thursday.
Scronic’s “lavish spending” was a bit constrained by his investment choices. It turns out the 46-year-old alleged fraudster — who did a sevenyear stint at Morgan Stanley following his Stanford and University of Chicago schooling — is a terrible investor.
After amassing $20.8 million in deposits from investors, Scronic sustained losses of $15.8 million, according to the Securities and Exchange Commission, which filed a parallel civil complaint in the case.
In fact, Scronic had losses in 79 of the 89 months he ran his fictitious hedge fund, the SEC claimed. The alleged fraudster spent $500,000 a year of investor cash on his personal lifestyle since 2012, including nearly $150,000 a year on his rented Austin Hill Road home that, according to Realtor.com, featured a pool, a tennis court and an eightseat viewing room.
Scronic, it appears, had a flair for spinning tales.
“What’s cool about my fund is that I’m only in publicly traded options and cash, so any redemptions are met within two business days, so if you do need to withdraw for your business needs it will be quick and painless,” Scronic told one investor in November 2015, according to the SEC complaint.
But when the investor tried to redeem the funds — totaling $223,000 — on Aug. 8, the request was met with “a variety of misleading excuses” from Scronic.
As recently as June 30, Scronic represented to clients that he managed $21.8 million in assets, when in fact his brokerage account held less than $27,500, the SEC found.
“Scronic’s alleged scheme is just another example of a so-called investment professional acting as fiduciary, but failing to deal honestly with his investors for his own financial benefit,” Lara Mehraban, associate regional director of the SEC’s New York regional office, said.
Scronic was charged by the Justice Department with one count each of securities fraud and wire fraud.
Attempts to reach Scronic were not successful.