(CN) - Former hedge fund president Lloyd Barriger was sentenced to five and a half years in prison for orchestrating a $12 million investment scheme, federal prosecutors said.
From April 2005 until the fund collapsed in September 2008, prosecutors said Barriger lied to investors about the performance of his Gaffken & Barriger Fund, a commercial real-estate financing fund based in Monticello, N.Y.
Barriger tricked investors by hiding important information about the fund, including a $600,000 loss in 2005, the fund's lack of income and liquidity, and its default on a $20 million line of credit in March 2007, prosecutors said.
In May 2008, the hedge fund wrote down the value of investors' portfolio by about 40 percent - slashing their capital accounts from about $25.5 million to $15 million.
Barriger pleaded guilty to securities fraud, conspiracy to commit securities fraud, mail fraud and conspiracy to commit mail fraud.
"The trust put in Lloyd Barriger, a Sullivan County hedge fund manager, by hopeful investors proved to be sadly misplaced," U.S. Attorney Preet Bharara said in a statement.
Barriger's sentence of five and a half years in prison was handed down by U.S. District Judge Cathy Seibel in White Plains, N.Y.
He was also ordered to forfeit more than $12.3 million and pay about $9.3 million in restitution to his victims.
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