Former fund manager John Mattera was sentenced to 11 years in prison on Friday, after pleading guilty of defrauding investors of $13 million (8.4 million pounds) with a story that he put their money in Facebook Inc and Groupon Inc shares before the companies went public. U.S. District Judge Richard Sullivan said the sentence, at the high end of what prosecutors requested, was warranted because Mattera devastated his clients' savings, and also because of four prior convictions related to fraud and theft. Mattera had requested a sentence of less than four years. "You hurt a lot of people in a very serious way," Sullivan said, after delivering the sentence. "You've left a lot of wreckage in your path." Mattera, 51, former chairman of the advisory board for mutual fund Praetorian Global Fund Ltd, pleaded guilty in October to charges of securities fraud, wire fraud, money laundering and conspiracy to commit securities fraud and wire fraud in connection with the scheme. He admitted transferring $11 million from investors into an escrow account instead of safeguarding it ahead of the highly anticipated initial public offerings. He also admitted taking $2 million more from investors who thought he was investing in Facebook and Groupon while they were still private. Instead, prosecutors said Mattera spent nearly $4 million of it on luxury cars, jewellery, personal taxes and a lawsuit settlement. Mattera had two Rolls Royces and a Ferrari when he was arrested, Assistant U.S. Attorney Eugene Ingoglia said. "It's just blatant fraud," Ingoglia said. As part of his plea, Mattera agreed to pay restitution to the defrauded investors and forfeit $11.8 million. One investor, Marisa Light Cain, 51, lashed out at Mattera in court on Friday. She said she lost $100,000 in the scheme after going through a difficult divorce, and Mattera's sophisticated deception included a fake audit letter from KPMG and a full prospectus. "I want to let Mr. Mattera know that I lost my life savings," Cain said. "I want you to know that I have a son out there who will not be educated in college as he should be" because of the fraud. Cain said Mattera's 11-year sentence was of little solace. "I don't think it's long enough, personally," she said after the hearing. "I'm very sorry to all the victims," Mattera told Sullivan before the judge sentenced him. "I'm very sorry to my family." The sentence was substantially larger than several insider trading-related sentencings Sullivan has handed down in recent months. He sentenced two former hedge fund managers, Todd Newman and Anthony Chiasson, for example, to 4-1/2 and 6-1/2 years in prison, respectively. Sullivan said Mattera got the longer sentence because of his lengthy criminal background. Mattera failed to seize multiple opportunities to turn his life around, Sullivan said. "These crimes are just so selfish," Sullivan said. "This is money that people took years and years to save, and it was squandered." The case is USA v John Mattera, U.S. District Court for the Southern District of New York, No. 12-00127. |
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