(STMW) — One of the largest fraud cases ever tried in Chicago has ended with Sentinel Management Group CEO Eric Bloom’s conviction on all 19 counts.
Bloom, 49, of Northbrook, is all but certain to face a lengthy prison term after jurors took just three hours at the end of his month long trial to convict him, the Chicago Sun-Times is reporting.
Sentinel — founded 28 years earlier by Bloom’s father — boasted for years that it had never lost a dime of its customers’ money but lost $500 million when it collapsed in 2007 under the weight of Bloom’s risky financial bets.
His bald head fell as the verdict was announced in federal court Tuesday afternoon. His wife sobbed and his mother wailed in a piercing shriek of shock.
Jury foreman Richard Yule said after the verdict all of the jurors “felt for her,” but said all the jurors agreed Bloom was guilty on their first ballot.
Yule, 68, of Evanston, described the dry, complicated and long trial as “Very hard to get through.”
During closing arguments Monday prosecutors alleged that Bloom made “oodles of money” made by conning Sentinel’s investors.
His attorneys argued that Sentinel collapsed as a result of the worldwide 2007 credit crunch, which they called a “tsunami . . . a one of a kind, 100-year financial crisis.”
But prosecutors said the market crash merely exposed weaknesses at Sentinel caused by Bloom’s fraud.
Though Sentinel boasted that in nearly three decades of business it had “never lost a dime” of its client’s funds, Bloom for years secretly used customer cash as collateral for huge bank loans that he in turn used to make risky leveraged bets for his family’s benefit, they alleged.
The New Trier High School graduate covered losses by “robbing Peter to pay Paul,” deciding which clients should get larger returns and which should suffer based on his own interests, rather than the performance of each client’s investments, said Assistant U.S. Attorney Patrick Otlewski.
Even when it became clear in August 2007 that his bad bets would destroy Sentinel, he ignored legal advice and continued to accept deposits of more than $100 million, all of which was lost, Otlewski said.
“Sentinel was sinking faster than the Titanic but he didn’t tell the people on board — he didn’t tell his customers,” the prosecutor said.
But defense attorney Terry Campbell said Bloom could not be convicted because he acted in “good faith.”
Though Bloom was in Africa on his honeymoon as the crisis deepened in the month leading up to Sentinel’s collapse, “inattentiveness is not a crime,” Campbell told jurors. “It’s not a crime to lose money on investments,” he added.
Campbell blamed Sentinel’s Chief Financial Officer, Charles Mosley, for wrongdoing, telling jurors that trusting Mosley was “Bloom’s mistake.”
Mosley previously agreed to a plea deal under which he agreed to cooperate with prosecutors.
Bloom faces up to 20 years in prison on each of 18 wire fraud convictions, up to five years for investment advisor fraud, plus a huge fine.
(Source: Sun-Times Media Wire © Chicago Sun-Times 2014. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)