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Bailey McCann, Opalesque New York:

Michael Scronic, a hedge fund manager in Westchester was charged by the SEC today for running a Ponzi scheme. In the complaint, the regulator says that Scronic began to raise money from at least 42 friends and acquaintances, many of whom were from his suburban community, in order to invest in a risky options trading strategy. He allegedly lured investors by informing them that he had a long and impressive track record of proven returns. He also allegedly lied to investors about the liquidity of investments.

Scronic was actually hemorrhaging investor money through massive trading losses, with at least $15 million in investment losses since April 2010. For the period ending June 30, 2017, Scronic allegedly reported to investors total assets of at least $21,837,475 while the balance in his brokerage account on June 30, 2017 was just under $27,500.

When investors attempted to redeem from the fund, instead of raising money from new people, Scronic first started by giving the investors a laundry list of increasingly implausible excuses in order to buy time. As new people came into the fund, the investors that wanted to redeem were slowly repaid.

The SEC also alleges that Scronic began identifying himself as an investment adviser to a fictitious hedge fund in which he purported to sell interests, or "shares."

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