Fraud Conviction
Alberto Vilar and Gary Tanaka were arrested on May 26, 2005, on charges of securities fraud. The government claimed that the two appropriated as much as $5 million of an Amerindo client's - Lily Cates, heiress and mother of actress Phoebe Cates - money for personal use; it was alleged that Vilar used the money to pay for some home repairs and to make good on previously-promised charitable contributions. It was also alleged that Tanaka used money to purchase thoroughbred race horses. The SEC also filed a civil suit (see ).
According to Stewart’s article in The New Yorker, an extensive analysis of Vilar’s rise and fall, “Vilar maintains that when he was arrested he was on the brink of a financial comeback. "Everything I predicted about the Internet has come true.... I'm ready to go back to work and make money." Stewart continues that, “if convicted, Vilar and Tanaka face fines of more than ten million dollars and prison terms of up to a hundred and fifty-five years. But Vilar says, "We'll sort this out. I'll get beyond this. I will always try to help others.... I still love opera and classical music.... The Met is not going to get my money, but it will not kill my love of music."
The charges did not allege wrongdoing at Amerindo's mutual funds, and when the firm was wound up there were no missing funds. But Morningstar, a fund analysis company, advised investors to withdraw their money in any case, because the funds had been performing very poorly. In fact, as with many other funds investing in internet companies, investors had already been pulling out for some time, reducing assets and causing expense ratios to increase. Extensive seizures of records and computers in the course of the investigation compelled Amerindo's board to merge the fund with Munder Capital Management's fund, Munder NetNet, later renamed Munder Internet. The seizures were ruled excessive by a federal judge in early 2007.
Represented by high profile attorney Ivan Fisher and then Herald Price Fahringer, Vilar's trial concluded on 19 November 2008 with the conviction of Vilar on all 12 counts with which he had been charged and the conviction of Tanaka on 3 counts.
On 5 February 2010, Vilar was sentenced to nine years in prison, while Tanaka was sentenced to five years.
Read more about this topic: Alberto Vilar
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