By Nate Raymond and Karen Freifeld
NEW YORK (Reuters) - A New York lawyer left a suicide note admitting that he had run a $5 million Ponzi scheme and called the investments "all an illusion," prosecutors said on Friday.
Charles Bennett, 56, who was rescued Nov. 3 after he jumped into the Hudson River, was arrested and charged with securities and wire fraud in Manhattan federal court.
Police officers recovered a note Bennett signed called "A Sad Ending to My Life" in which he confessed he "managed to completely squander the hard-earned money" of his family and friends, according to court documents.
"It was a Ponzi scheme pure and simple," Bennett wrote, the criminal complaint said.
The U.S. Securities and Exchange Commission also sued Bennett, saying he lured 30 investors with promises of 6 to 25 percent returns and misleading claims that a New York State governor and his then-wife were also investors.
While not named in the complaint, Silda Wall Spitzer, Eliot Spitzer's ex-wife, confirmed she once worked with Bennett at Skadden, Arps, Slate, Meagher & Flom. She called the case "astonishing and heartbreaking on all counts."
Eliot Spitzer, who was governor from 2007 to 2008, called it "a horrific act by someone who pretended to have a relationship that did not exist and who lured unwitting investors into a Ponzi scheme."
The FBI arrested Bennett on Friday morning at Mount Sinai Roosevelt Hospital, where he was being treated following the suicide attempt.
During a court hearing Friday, prosecutor Amy Lester argued Bennett should be detained, saying he demonstrated a "great risk - some might say the ultimate risk - to avoid prosecution."
A judge instead allowed him to remain free until his hospital release after Bennett's lawyer argued he would not avoid facing the charges.
"This is a person who's suffering a great deal of regret and remorse," said Julia Gatto, Bennett's lawyer.
According to the SEC, Bennett previously worked at several law and accounting firms, including the law firm where he met the governor's ex-wife.
In 2001, Bennett started his own law practice, which he had trouble keeping afloat, the SEC said.
He began the Ponzi scheme in 2008, authorities said, telling investors he had a relationship with a fund manager and could arrange for investments in the fund.
But Bennett never invested the money and instead used it for his own benefit and to repay investors, authorities said. The suicide attempt came after investors began demanding repayment, Lester said.
(Editing by Noeleen Walder, Grant McCool and Bernard Orr)