A north suburban financier behind the biggest fraud case ever prosecuted in Chicago has been sentenced to 14 years in prison for a scam that cost investors $665 million.
Eric Bloom, 49, “lied, cheated and stole from his clients” for nearly four years, U.S. District Judge Ronald Guzman said in imposing the sentence, according to the Chicago Sun-Times.
Investors lost more than a half-billion dollars when Bloom’s Sentinel Management Group collapsed in 2007, a collapse that presaged the worldwide credit crunch.
Though the cash management firm boasted it was a fortress that had “never lost a dime” of its clients’ cash in 30 years of low-risk business, Bloom dishonestly built it into a highly leveraged “house of cards” that blew away when the economy started to sour, prosecutors said at a sentencing hearing Friday.
Prosecutors had asked for a sentence of at least 20 years.
But Bloom gave a defiant speech in which he said he was “a good man” and “not a thief.” Though he said he regretted his clients losses, he pinned the blame on his codefendant and former employee, Charles Mosley, who was later Friday sentenced to 8 years in prison for his role in the scam.
Guzman said that Bloom “simply fails to grasp what he has done.”
Bloom’s family sobbed as the sentence was announced, but Bloom showed little emotion. He made just $800,000 from the scam, at most, his lawyers said.
Jurors needed only three hours of deliberations last year to decide that Bloom destroyed his business by illegally and secretly using client funds as collateral for loans that he used to make bets on the securities market.
For a while, the bets paid off. Bloom’s parents made more than $10 million from Sentinel’s “house account” during the four-year fraud, and Bloom himself made $700,000, in addition to his $165,000 a year salary, evidence showed.
All the while, he strung along key investors by artificially boosting their returns at the expense of less favored clients.
But when the market crashed, Sentinel could not repay the huge loans Bloom had secretly used client funds to secure, and it collapsed.