Amerindo principal sentenced to nine years in prison

Alberto Vilar was sentenced for fraud that included convincing a client to commit $5m to a nonexistent venture fund.

Amerindo Investment Advisors financier Alberto Vilar was sentenced to nine years in prison last week, for misappropriating $22 million from clients. Vilar was convicted not only of selling fraudulent financial products, but of convincing one client to invest $5 million in a fake venture fund.

It was the second time he and his business partner, Gary Alan Tanaka, have been accused of fraud. Vilar was convicted on fraud and money laundering charges in 2008, while Tanaka was convicted of securities fraud, investment advisor fraud and conspiracy charges.

Vilar and Amerindo co-founder Tanaka, who has received a five-year prison sentence, sold fixed-return products to clients, telling them that the money would be invested in government-backed securities and treasury bills. Instead, Vilar and Tanaka used the funds to buy risky technology stocks purchased on margin, then kept the excess profits.

The Securities and Exchange Commission’s complaint also described an instance in which Vilar solicited an Amerindo client and “close personal friend” to invest $5 million in the Amerindo Venture Fund LP, which Vilar said was being organised as a Small Business Investment Company (SBIC). After the client wired the funds to a brokerage account, Tanaka transferred a portion of the investor’s funds to other accounts – including $1 million to a personal checking account held in Vilar’s name, and $650,000 to a bank account Amerindo controlled. 
Vilar then used the funds he received from the investor to pay personal expenses, including transferring $540,000 to Washington and Jefferson College, his alma mater to which he had pledged large sums, and $177,000 to the American Academy in Berlin, an institution to which Vilar had donated money in the past.
Vilar was also given three years of probation to be served after his prison term and a $25,000 fine. He was ordered to pay $21.9 million in restitution.

“I deeply regret any inconvenience our 14,000 clients may have suffered,” Vilar said in a court statement. “Fortunately, there are only five victims. I'm 95 percent confident they will be paid and not suffer a loss.”

Amerindo was a registered investment adviser with offices in San Francisco, New York and London.