Former hedge-fund manager Ward Onsa was sentenced to 6 1/2 years in prison for using his firm, New Century Investment Management LLC, to run a Ponzi scheme.
Onsa pleaded guilty in Brooklyn, New York, federal court in December to one count of securities fraud in connection with the scheme. Investors, primarily retirees, lost more than $3 million, according to the government.
Through New Century, Onsa made special arrangements with institutional money managers, including Charles Schwab & Co. (SCHW:US) and Millennium Trust Co., to facilitate the theft, the U.S. alleged. As part of his penalty, Onsa today was also ordered to pay $3.1 million as restitution and to serve three years of supervised release.
“He is a con artist who convinced a lot of people to part with their savings, to part with retirement funds, and I’m not convinced that it was not for personal gain,” said U.S. District Judge Dora L. Irizarry, responding to defense arguments that Onsa didn’t profit from the scheme.
The former investment manager launched Southampton, Pennsylvania-based New Century after his previous firm, Ward Onsa & Co., was bankrupted by trading losses and default judgments, the government alleged. He funneled money solicited from investors to himself and his previous firm, the government said.
Onsa’s firm isn’t related to Hanover, Massachusetts-based New Century Investment Management LLC or Southfield, Michigan- based New Century Investment Management Inc.
In addition to the criminal case, Onsa faces civil claims brought by the U.S. Commodity Futures Trading Commission over the New Century fraud. The fund purportedly invested in both e- mini S&P 500 futures contracts and options on those contracts, the agency said in its suit, filed in Philadelphia federal court.
The fund suffered significant losses, which Onsa concealed by providing fake account statements and by paying some customers with others’ funds, the CFTC alleged.
In court today, Onsa told the judge that he “tried to right the ship” and failed.
“People deserve the truth,” he said while seated in the courtroom and wearing a dark suit. “I should have given it to them right away.”
Referencing his previous firm Ward Onsa, the judge said Onsa “had to know based on his past experience that he could not perform” as promised to investors.
The sentence was seven months longer than the maximum amount of 71 months the government had agreed to seek under a plea agreement with Onsa. He faced a range of 6 1/2 to 8 years in prison under federal sentencing guidelines.
The case is U.S. v. Onsa, 10-cr-00730, U.S. District Court, Eastern District of New York (Brooklyn).
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