Federal prosecutors, in one of the country’s largest financial-fraud cases, announced in Chicago that a former head trader and CEO from a bankrupt firm had been charged with defrauding over 70 clients out of over $500 million.
Eric Bloom the former CEO of Sentinel Management and Charles Mosley are accused of using customers’ securities as collateral for a Bank of New York loan they received said the Chicago office of the U.S. Attorney.
Before the collapse of Sentinel, it boasted that no client had lost money throughout the funds history, which was available to wealthy individuals, institutional investors and corporations.
In 2007, when Sentinel started to have financial difficulties with a $400 million credit about to default, Mosley and Bloom tried to conceal the problems at the company from their customers alleges the indictment.
The indictment alleges that Bloom misled customers purposely days prior to the firm declaring bankruptcy by putting the blame on the credit crunch that was taking place worldwide. Even though he was aware, the core problem was the high-risk illiquid securities he had purchased.
Mosley and Bloom were charged each with 18 separate counts of wire fraud, one count of false statements and one securities fraud count. If both are convicted, they face up to 20 years on each of the wire fraud counts. Authorities are also trying to win the forfeiture of over $500 million.
