NEW YORK (Reuters) – A San Francisco investment fund manager was sentenced to 2-1/2 years in prison on Tuesday after he pleaded guilty to conspiring to defraud investors by fabricating an impressive investing track record.
Nicholas Mitsakos, 57, was sentenced by U.S. Circuit Judge Denny Chin in New York, U.S. prosecutors announced. Mitsakos, who ran a fund called Matrix Capital Markets, pleaded guilty to a conspiracy charge in May.
As part of a plea agreement, Mitsakos agreed not to appeal any sentence of 37 months or shorter, and to forfeit about $861,000.
“Nick stepped forward and took responsibility for what he did,” Mitsakos’ lawyer, Eric Creizman, said in an email.
He added that he did not believe Mitsakos should have gotten any prison time. “The justice system in this country is far too harsh and fails to consider alternatives to incarceration when they are available.”
Mitsakos was arrested and charged in August 2016. Prosecutors said he tried to lure investors by representing Matrix as a hedge fund managing more than $60 million of assets, posting annual returns ranging from 20 percent to 66 percent between 2012 and 2015.
In fact, prosecutors said, Mitsakos managed no customer assets at all before receiving an investment of about $2 million from a Cayman Islands fund in September 2015. He then spent about $800,000 on personal expenses and lost a significant amount of the $1.2 million he did invest, according to prosecutors.
“As he admitted in pleading guilty today, Nicholas Mitsakos purported to operate a successful hedge fund, but in reality, it was a sham from the outset,” Acting U.S. Attorney Joon Kim in Manhattan said in a statement.
The case is USA v. Mitsakos, U.S. District Court, Southern District of New York, No. 16-cr-00631.
Reporting by Brendan Pierson in New York; Editing by Dan Grebler