Nov. 20 (Bloomberg) -- Alberto Vilar and Gary Tanaka were found guilty of a scheme to steal $20 million from clients at Amerindo Investment Advisors, which made and then lost billions of dollars for investors in computer and Internet stocks.

Prosecutors said Vilar, 67, and Tanaka, 65, stole the money to keep New York-based Amerindo afloat and to pay Vilar's personal expenses after the firm's investments plunged in value beginning in 2000. A Manhattan federal jury yesterday convicted Vilar on all 12 counts, including conspiracy and securities fraud, and Tanaka on three counts. The men, who co-founded Amerindo, face as much as 20 years in prison on the most serious charges.

``We're deeply disappointed,'' Herald Price Fahringer, Vilar's lawyer, said after the verdict, which followed three days of deliberations. ``We expect to be fully vindicated on appeal.''

The seven-week trial featured testimony from victims including Lily Cates, a former model who is the mother of actress Phoebe Cates. Cates claimed Vilar and Tanaka stole $5 million from her by falsely promising to put the money into a U.S. government-backed investment program.

Instead, Amerindo used $3.1 million of the money to pay off another investor and $650,000 to pay the firm's bills. Another $1 million went to Vilar, who used it to fulfill a charitable pledge to his alma mater, Washington and Jefferson College in Pennsylvania, and for other personal expenses, prosecutors said.

Sentencing Date

No sentencing date was set. The two men were told to return to court Nov. 26 when U.S. District Judge Richard Sullivan will decide whether they may remain free on bail until sentencing.

Manhattan U.S. Attorney Michael Garcia, who announced Nov. 17 that he was stepping down on Dec. 1, said yesterday in an interview with Bloomberg Television that he wasn't surprised by the verdict.

The prosecutor said that he expected a guilty verdict given the ``evidence that's been coming in over the past few weeks, of the misrepresentations that were made of the fraud that occurred, of the money being moved around--surreptitiously or by fraud.''

The government said that in 2003, Vilar and Tanaka took an additional $250,000 from Cates's Bear Stearns Cos. brokerage account. The government showed jurors videotaped testimony of Tanaka's assistant in London, Maxine Rye, who said that, at her boss's direction, she cut out and taped Cates's signature onto a fax authorization transferring the money.

Fixed-Rate Deposit

Vilar and Tanaka defrauded other investors in Amerindo's guaranteed fixed-rate deposit accounts by telling them most of their money would be put into safe, liquid investments, including government-backed securities, prosecutors said. Instead, they used the money to buy risky technology stocks on margin. When the value of the stocks dropped, the money was gone, the U.S. said.

Before his arrest in May 2005, Vilar was one of the world's top benefactors of opera, donating millions to companies in the U.S. and Europe in addition to hospitals and educational institutions. He also failed to deliver on many of his charitable pledges, announcing new philanthropic plans as previous commitments remained unfulfilled.

The Metropolitan Opera in New York, the Washington Opera and Denver's National Jewish Hospital are among institutions that said Vilar didn't make good on all of his pledges.

In October 2005, Forbes magazine, which in 2004 had ranked Vilar as the 327th-richest American with $950 million in assets, said he had ``fooled'' the magazine. After his arrest, Vilar spent almost a month in jail before friends helped him post $4 million to secure his bail.

Top-Ranked

Tanaka, an owner of top-ranked thoroughbred racehorses, was born in a U.S. internment camp for people of Japanese ancestry in Idaho during World War II. He hasn't seen his wife since his arrest 3 1/2 years ago, according to his lawyers. In court papers, prosecutors identified Renata Tanaka, who worked with her husband in Amerindo's London office and isn't charged, as part of the alleged conspiracy.

In 2003 and 2004, when many of the criminal acts took place, Tanaka was receiving cancer treatments in New York, including surgery to remove and replace most of his lower jaw, his lawyers said. Tanaka's lawyer, Glenn Colton, said his client wasn't involved with individual money transfers at a time when he was ``fighting for his life.''

The two men were charged with conspiracy, securities fraud, investment-adviser fraud, mail fraud, wire fraud, money laundering and lying to the U.S. Securities and Exchange Commission. Tanaka was convicted of one count each of conspiracy, securities fraud and investment adviser fraud.

After yesterday's verdict, Tanaka embraced his tearful 85- year-old mother, who attended most of the trial.

``We're very disappointed in the result,'' said Colton, adding they are considering an appeal.

Bear Stearns

Richard Marin, a former Bear Stearns executive, testified at the trial, telling jurors that the now-defunct securities firm considered buying Amerindo in 2004. Prosecutors said that Vilar and Tanaka lied to Bear Stearns and to the SEC about an Amerindo shell company in Panama, falsely claiming it had been sold years earlier. The Bear Stearns deal was never closed.

The jury of five men and seven women on Nov. 18 sent a note to Sullivan saying they'd reached agreement on all 12 counts facing one of the defendants and remained split on seven counts facing the other.

Raised voices could be heard coming from the jury room that day and the day before. Some of the jurors called one another names during deliberations, Maryann Medaglia, one of the jurors said yesterday.

``I went home yesterday, relaxed, had a scotch. And we came back this morning and did what we had to do,'' said Medaglia, a school crossing-guard in Manhattan.

The case is U.S. v. Vilar, 05-CR-621, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in U.S. District Court in New York at rvanvoris@bloomberg.net.

Last Updated: November 20, 2008 00:01 EST