Reuters: Bankruptcy News: UPDATE 1-Sentinel ex-CEO, trader indicted for alleged fraud

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UPDATE 1-Sentinel ex-CEO, trader indicted for alleged fraud Jun 1st 2012, 16:51 Fri Jun 1, 2012 12:51pm EDT * US alleges fraud exceeded $500 million * Eric Bloom, Charles Mosley each charged with 20 counts * Sentinel went bankrupt in August 2007 June 1 (Reuters) - The former chief executive officer and head trader of Sentinel Management Group Inc were indicted for allegedly defrauding customers out of more than $500 million before the futures brokerage went bankrupt in August 2007, federal prosecutors in Chicago said on Friday. Eric Bloom, who was Sentinel's CEO, and trader Charles Mosley were accused of misappropriating securities belonging to customers, and pledging them as collateral for a loan from Bank of New York Mellon Corp to fund a trading portfolio meant to benefit them and Bloom's family. The alleged fraud ran from January 2003 to August 2007, according to the indictment returned on Thursday by a federal grand jury, U.S. Attorney Patrick Fitzgerald in Chicago said. Lawyers for Bloom and Mosley did not immediately respond to requests for comment. A spokesman for Bank of New York Mellon, which is not accused of wrongdoing, had no immediate comment. The collapse of Northbrook, Illinois-based Sentinel has been compared with the October 2011 bankruptcy of the larger MF Global Holdings Ltd. No criminal charges have been brought in the MF Global case. Fitzgerald called the Sentinel charges one of the largest criminal financial fraud cases ever prosecuted by his office. Bloom and Mosley were each charged with 18 counts of wire fraud, one count of securities fraud and one count of making false statements. Each wire fraud count carries a maximum penalty of 20 years in prison plus a fine. The indictment also seeks the forfeiture of more than $500 million. The defendants had previously been accused in civil cases brought by the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission of improperly mixing client money with their brokerage's money, similar to what investigators believe happened at MF Global. Bloom and Mosley have been fighting those charges. An arraignment date in the criminal case has not been set. The case is U.S. v. Bloom et al, U.S. District Court, Northern District of Illinois. Link this Share this Digg this Email Reprints

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