Politics & Government
Northbrook Man Indicted on Federal Fraud Charges
President and CEO Eric A. Bloom accused in alleged $500 million fraud scheme before collapse of Sentinel Management in 2007.
Northbrook resident Eric A. Bloom, the president and CEO in the bankrupt Sentinel Management Group, was indicted on federal fraud charges for allegedly defrauding more than 70 customers of more than $500 million before the firm collapsed in August 2007, federal law enforcement officials announced Friday.
Bloom and the chief trader Charles K. Mosley of Vernon Hils 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 in a 20-count indictment that was returned by a federal grand jury yesterday.
The indictment seeks forfeiture of more than $500 million.
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An arraignment date has not yet been set in U.S. District Court.
The announcement of the indictment and the indictment itself are attached as PDFs.
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Sentinel managed short-term cash investments of futures commission merchants, commodity pools, hedge funds, at least one pension fund, and other customers.
According to federal authorities, Bloom and Mosley allegedly misappropriated securities belonging to customers by using them as collateral for a loan that Sentinel obtained from Bank of New York Mellon Corp.
That loan was in part used to purchase millions of dollars worth of high-risk, illiquid securities not for customers but for a trading portfolio maintained for the benefit of Sentinel’s officers, including Mosley, Bloom, certain Bloom family members, and corporations controlled by the Bloom family, federal authorities said.
Bloom, who was responsible for its day-to-day operations, allegedly misled customers four days before Sentinel declared bankruptcy by blaming Sentinel’s financial problems on the “liquidity crisis” and “investor fear and panic,” federal authorities said.
Federal authorities charge that Bloom knew that the actual reasons for Sentinel’s financial problems were its purchase of high-risk, illiquid securities, excessive use of leverage and the resulting indebtedness on the Bank of New York Melon credit line. That balance exceeded $415 million on Aug. 13, 2007. Sentinel declared bankruptcy on Aug. 17, 2007.
