Bond is given 12 years in jail

Money manager swindled millions from Md. pensioners, others

Judge rejects plea for mercy

February 12, 2003|By Jon Morgan and William Patalon III | Jon Morgan and William Patalon III,SUN STAFF

Alan B. Bond, the charismatic Wall Street money manager who swindled millions of dollars from Maryland pensioners and other clients, was sentenced yesterday to more than 12 years in prison.

U.S. District Judge Leonard B. Sand summarily rejected Bond's plea for mercy - and his promise to enroll in a divinity school and to seek atonement.

"Mr. Bond said he acted in pursuit of dreams," Sand said in his New York courtroom. "`Dreams' is a euphemism for what I characterize as greed and ego."

A federal jury convicted Bond, 41, of fraud last year for a "cherry picking" scheme in which he diverted the proceeds from profitable trades to his own account while steering losses to his clients. He later pleaded guilty to separate charges of directing business to brokers in exchange for kickbacks.

Sand sentenced Bond to 12 years and seven months, close to the maximum of 15 years permitted by law.

He also fined Bond $35,000 and ordered him to pay $6.6 million in restitution to his victims - presumably including the Maryland State Pension and Retirement System.

Bond was entrusted with $33 million of the state's pension fund by Baltimore financier Nathan A. Chapman Jr., who had been hired to find minority-run investment firms such as Bond, Procope, Bond's company, which he later renamed Albriond Capital Management.

Federal and state authorities are still investigating Bond's use of more than $5 million of that money to buy stock in companies largely owned and operated by Chapman. Experts have said those transactions are conflicts of interest and may be illegal.

The $25 billion state pension system invests and administers the retirement benefits of thousands of teachers, police officers and other current and retired government workers.

Of the $33 million Chapman invested with Bond, $14.2 million remained by the time the portfolio was liquidated in 2001. A forensic accountant with the Maryland attorney general's office has been sifting through records in an effort to pin down just how much the state lost to Bond's fraud, rather than market conditions.

"We don't know exactly how much we're going to get [in restitution] - that is up to the judge," said Maryland pension system spokesman Joseph Coale. "Any actions that go to making restitution ... is good news for the Maryland state pension system."

Bond, who gained fame as a regular guest on public television's Wall Street Week and other programs, pleaded guilty to conspiring with a broker to inflate the fees for his clients' stock transactions. In exchange, he kept a portion of the proceeds.

Prosecutors said Bond used his crimes to finance a lavish lifestyle, buying 75 cars and going on shopping sprees at Saks Fifth Avenue. In one month, Bond charged $470,000 on his American Express card.

When fraud charges were filed in 1999, many clients - including the National Basketball Players Association - pulled their cash out of Albriond, an amalgamation of Bond's full name, Alan Brian Bond. But Chapman poured more of Maryland's money in. Telling state officials that the charges against Bond were "trumped up," he invested an additional $10 million of the pension system's money with Albriond in 2000 and 2001.

Facing more than $1 million in legal bills on the kickback charges, Bond hatched a new scheme beginning in March 2000, just a few months after his first indictment. Among the victims: Chapman's minority trust, made up mostly of Maryland pension system money.

Bond's clients, including the Maryland pension system, lost $54 million, while his $260,000 personal account grew to $5.5 million.

The Associated Press and Bloomberg News contributed to this article.

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