Two suburban Chicago men were sentenced to prison time Friday for defrauding customers of a cash-management firm out of more than $665 million before the company collapsed in 2007.
Eric Bloom, 49, of Northbrook, was accused of misappropriating customers' securities by using them as collateral for a loan received from the Bank of New York Mellon Corp. Prosecutors alleged Bloom used part of the bank loan to purchase millions of dollars of high-risk, illiquid securities — not for customers, but for a trading portfolio that benefited himself, co-defendant Charles Mosely, some of Bloom's relatives and corporations controlled by his family.
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Bloom proclaimed his innocence Friday before U.S. District Judge Ronald Guzman sentenced him to 14 years in prison.
"I am not a thief," said Bloom, who headed Northbrook-based Sentinel Management Group Inc.
The judge disagreed.
"Every working day for four years, Eric Bloom intentionally decided to lie and to steal," Guzman said. "He perpetrated a truly horrific fraud. He simply fails to grasp what he has done."
Mosley, 41, of Vernon Hills, was sentenced to eight years in prison.
Bloom and Mosley were each charged with 18 counts of wire fraud, one count of securities fraud, and one count of making false statements to an employee pension plan.
Guzman ordered both men to pay restitution totaling $665,923,451. Bloom was ordered to report for prison April 30. Mosley was ordered to surrender July 29.
Bloom purposely misled customers days before the firm declared bankruptcy by blaming a worldwide credit crunch and "investor fear and panic," according to prosecutors.
During the sentencing hearing, Robert B. Wasserman of the Commodity Futures Trading said Bloom's scheme "posed the threat of a massive liquidity crisis in the futures market" and subjected more than a dozen firms to an immediate risk of insolvency.