Bloom Lied to Clients to ‘Keep Their Money,’ Jury Is ToldAndrew Harris
Eric A. Bloom, chief executive officer of the failed investment firm Sentinel Management Group Inc., lied to clients to get their money and then “lied to keep their money,” a prosecutor said at the start of his trial.
“The defendant used his customers’ money as though it belonged to him and not to them,” Assistant U.S. Attorney Clifford Histed told jurors in opening statements today in Bloom’s investment-fraud case.
Bloom, 49, is accused of defrauding at least 70 investors of more than $500 million in what the U.S. calls one of the largest financial crimes ever prosecuted in Chicago.
Sentinel, which was based in Northbrook, Illinois, before its 2007 collapse, managed short-term investments for commodity pools, hedge funds, a pension fund and other customers.
Prosecutors say Bloom and the firm’s chief trader, Charles Mosley, wrongfully used clients’ money as collateral for loans from Bank of New York Mellon Corp. Sentinel in turn used the loans to buy high-risk securities for a portfolio maintained for firm officers, Bloom’s family members and entities they controlled, prosecutors say.
Mosley pleaded guilty last year to two counts of investment-adviser fraud and has agreed to cooperate with the government. He hasn’t been sentenced.
Defense lawyers say the firm collapsed as the economy soured and that Bloom made adequate disclosures to his clients.
“Eric Bloom is not guilty of any of these charges,” his attorney Theodore Poulos told the jury today. “The evidence is going to show he is, in fact, innocent.”
Poulos told the jury his client acted in good faith at all times and that that state of mind constitutes a “legitimate defense” to the allegations against him.
The defense attorney also told jurors that Mosley, who joined the firm in 2002 after working at the Federal Reserve Bank in New York, was effectively running Sentinel by 2006 as Bloom was increasingly devoting himself to raising his children after a divorce.
Bloom faces 18 counts of wire fraud, one count of securities fraud and one count of making false statements to an employee pension plan. Each wire fraud count is punishable by as long as 20 years in prison.
The jury consists of 11 men and 5 women. Twelve will decide the case. The others are alternates who will hear the evidence but deliberate only if one or more of the 12 have to drop out.
Poulos is a partner in the Chicago law firm Cotsirilos, Tighe, Streicker, Poulos & Campbell Ltd.
U.S. District Judge Ronald A. Guzman is presiding.
The case is U.S. v. Bloom, 12-cr-00409, U.S. District Court, Northern District of Illinois (Chicago).