By Brendan Pierson
NEW YORK (Reuters) - A New York hedge fund manager on Thursday pleaded guilty to federal charges that he defrauded investors through a nearly $22 million Ponzi scheme.
Michael Scronic, 46, entered his plea to one count of securities fraud before U.S. District Judge Catherine Seibel in White Plains, New York, federal prosecutors announced.
A lawyer for Scronic, Rachel Martin, declined to comment.
Prosecutors said Scronic, of Pound Ridge, New York, sent investors in his Scronic Macro Fund bogus account statements from 2010 to 2017 showing large positive returns. In fact, they said, he lost or spent all but about $27,000 of the $21.8 million he told investors the fund had.
Prosecutors said Scronic spent hundreds of thousands of dollars on himself while managing the fund, including on rent, fees for beach and country club memberships, and mortgage payments for a vacation home near Stratton Mountain in Vermont.
Scronic used new money to repay earlier investors, but began refusing to honor some investors’ redemption requests when money became tight in the summer of 2017.
They said Scronic blamed a vacation, a relative’s medical condition, email issues, and a new quarterly redemption policy for refusing one investor’s Aug. 8 redemption request, despite having earlier promised that investor "quick and painless" redemptions on demand.
Scronic worked for Morgan Stanley (NYSE:MS) from 1998 to 2005, including on an equities trading desk, and has degrees from Stanford University and the University of Chicago, according to court papers. Morgan Stanley was not accused of wrongdoing in the case.
Scronic also faces related civil claims from the U.S. Securities and Exchange Commission.