NEW YORK (AP) — A former portfolio manager at a financial firm was sentenced to 18 months in prison Wednesday for inflating the value of a hedge fund by tens of millions of dollars to dupe investors.
Stefan Lumiere, 46, of Manhattan, also was ordered to pay a $1 million fine in tiny increments after his prison stint, scheduled to start in September. He'll owe 15 percent of his gross income until his fine is paid off.
"The proof was overwhelming that the defendant committed the crime he's convicted of," said U.S. District Judge Jed Rakoff, who presided over a trial that ended in January with Lumiere's conviction on securities and wire fraud charges.
Assistant U.S. Attorney Ian McGinley said Lumiere created the scheme to artificially inflate the value of a fund consisting of debt instruments issued by health care companies "after his investments started to tank."
"This crime was the defendant's brainchild," McGinley told Rakoff. He said Lumiere was motivated by a desire to preserve his reputation at Visium Asset Management.
Prosecutors said the scheme caused investors in the fund to overpay for securities between 2011 and 2013.
Asking for mercy from Rakoff, Lumiere said he regretted the effect his prosecution has had on his family. He cited the embarrassment it brought to his father, a physician, and the pain his arrest and trial caused his sister, who was already going through a difficult divorce from Jacob Gottlieb, Visium's founder.
He said his life had been upended.
"In one fell swoop, all my studies and work are for nothing," Lumiere said. "My dreams of running my own investment company are over."
His new occupation will be real estate and construction, Lumiere said.
Lumiere's attorney, Jonathan Halpern, said Lumiere was a "hapless soul, a working stiff" at a company where he was not well treated, particularly as his sister went through "a vitriolic and contentious divorce."
Halpern said Lumiere earned $200,000 in salary "when others were earning millions of dollars."
Rakoff used the sentencing to again take a swipe at federal sentencing guidelines that would have called for Lumiere to spend six or seven years in prison if judges didn't have the freedom to offer leniency after an analysis of sentencing factors such as the prior record of the defendant, whether there were victims of the crime and the need for deterrence.
He said the guidelines often recommended "draconian penalties" that were "more typical of a brutal regime than of a proud American legal system."