Jan. 15 (Bloomberg) -- Aleksander Efrosman, the former hedge-fund manager who fled the U.S. after swindling his clients out of $5 million and gambling away most of it at a casino, was sentenced to more than 15 years in prison.
Efrosman, 51, who was extradited from Poland and pleaded guilty to wire fraud in 2012, was sentenced today by U.S. District Judge Nicholas Garaufis in Brooklyn, New York, to 188 months behind bars and ordered to pay restitution of $4 million, federal prosecutors said in a statement.
“Efrosman has finally been held to account for his betrayal of his clients’ trust,” U.S. Attorney Loretta Lynch in Brooklyn said in the statement. The former hedge-fund manager had been “globe-trotting to escape justice.”
A U.S. citizen, Efrosman was indicted in 2006 after fleeing in 2005. He traveled to Mexico, Panama and Poland, where he assumed the identity of Mikhail Grosman, using a fraudulent Russian passport, Lynch said.
Law enforcement authorities in Austria, the Czech Republic and Poland tracked and arrested Efrosman in Krakow, Poland, on May 28, 2010, according to the statement.
Efrosman controlled foreign-currency hedge funds Century Maxim Fund Inc. and AJR Capital Inc. As part of his plea, he admitted to running a scheme to cheat more than 100 clients out of $5 million in 2004 and 2005.
Efrosman used customer money for his personal benefit and gambled more than $3 million at the Foxwoods Resort Casino in Connecticut, according to prosecutors.
The former hedge-fund manager’s federal public defender, Michael Schneider, had sought a sentence of about 10 years, citing Efrosman’s “undiagnosed mental illness in his criminal conduct, his failing health and the harsh nature of his confinement” in Poland and New York, according to a Jan. 10 letter filed with the court.
Efrosman’s gambling was evidence that his scheme wasn’t part of a “calculated plan to defraud investors, build his assets, and flee the country for his next fraud,” Schneider said in the letter.
“The hard truth for Mr. Efrosman is that as fast as AJR and Century Maxim took in money, he spent it, mostly on vices,” Schneider said in the report. “He recognizes that there is little redeeming in that story, but he looks forward to trying to redeem himself day by day.”
He told the investors he would put their money in the stock market and foreign-currency exchange market, according to prosecutors. He falsely said that he had a history of profitable trading and that he would use a “stop-loss” mechanism to ensure that no trade would lose more than 3 percent, the government said.
Formerly of Staten Island, New York, Efrosman fled the U.S. while on supervised release after leaving prison in April 2003 for a conviction in a foreign-exchange scheme, according to prosecutors. He pleaded guilty in that case after being extradited from France.
Efrosman ran a third investment scheme while in Panama, where he was joined by his wife and children, prosecutors said.
The case is U.S. v. Efrosman, 06-cr-00095, U.S. District Court, Eastern District of New York (Brooklyn).
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