Hedge Fund Manager Stole $19M From Clients In Ponzi Scheme: US Attorney

POUND RIDGE, NY — A Pound Ridge hedge fund manager has been arrested for running a Ponzi scheme. Joon H. Kim, the acting United States attorney for the Southern District of New York, said Thursday that Michael Scronic, 46, of Pound Ridge, was charged with securities and wire fraud arising out of his execution of a $19 million Ponzi scheme through the Scronic Macro Fund. Scronic will appear before U.S. Magistrate Judge Lisa Margaret Smith in White Plains federal court Thursday.

Kim said Scronic 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. (For more information on this and other neighborhood stories, subscribe to Patch to receive daily newsletters and breaking news alerts.)

“Hedge fund managers who lie to their investors and steal their money, as Scronic is alleged to have done, will always be in our sights as targets for federal prosecution,” he said.

Scronic faces one count of securities fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison, authorities said.

According to the allegations contained in the complaint unsealed today in White Plains federal court, Scronic raised more that $19 million from 45 investors in the Scronic Macro Fund from April 2010 to the present. He told investors the fund had made money in all but one quarter from January 2012 through June 2017.

In fact, according to authorities, the fund had lost money in 28 out of 29 quarters. The net loss was about $15.7 million before commissions.

As a result of the losses, Scronic's combine brokerage and bank accounts totaled $102,376, while he had claimed there was $21.7 million.

Besides losing money on trades, Scronic used investor money for personal expenditures averaging more than $500,000 a year and included $12,275 a month in rent for his Pound Ridge home, vacation home mortgage payments, beach and country club fees and credit card charges averaging more than $15,000 per month.

In recent months, according to authorities, Scronic has been unable to pay redemptions requested by investors, to the tune of $1.5 million. Instead, he told the investors that they would be paid at the end of the quarter, that he was preoccupied with a relative's medical condition or that he was on vacation.

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