He claimed he was a blameless victim of the worldwide credit crunch.
But a federal jury took less than three hours on Tuesday to decide Eric Bloom was something else: a wealthy felon who pulled off what’s believed to be the largest financial fraud ever prosecuted in Chicago.
Bloom, 49, slumped his bald head until his chin rested on the top of his neatly-knotted pink tie as the verdict was announced finding him guilty of 19 counts of fraud connected to the $500 million bankruptcy of Sentinel Management Group..
His young wife — who might reasonably have expected a life of privilege and comfort when she married the respectable-looking Northbrook CEO just months before Sentinel’s collapse — quietly sobbed into a handkerchief.
And moments later his mother, Sybil, let out a piercing shriek of shock that echoed down the corridors of the Dirksen Federal Courthouse as she realized her son is now all but certain to face a huge fine and lengthy prison term.
It was a quick and dramatic end to a month-long, dry, complicated fraud trial that jury foreman Richard Yule said was “very hard to get through.”
Jurors “felt for” Bloom’s devastated mother but reached a unanimous guilty verdict on all counts on their first ballot, finding that Bloom lied to his clients for his own benefit, Yule said.
Sentinel’s August 2007 collapse cost its clients an estimated half billion dollars and was an early harbinger of the worldwide financial crisis that the U.S. is still recovering from.
Founded in 1979 by Bloom’s father, Phil, the investment firm catered to savvy financial insiders looking for safe returns, boasting it had “never lost a dime” of its clients’ money.
But it was far from the “fortress” Bloom claimed, prosecutor Clifford Histed said during closing arguments Tuesday morning. Sentinel “was a house of cards in a hurricane, and when the wind blew, it blew away,” Histed said.
Bloom — who paid himself around $500,000 a year and was planning to build his new family a fancy new home — destroyed the business by illegally using client funds as collateral for loans that he in turn used to make hugely leveraged bets on the securities market.
For a while, the bets paid off. Bloom’s parents made more than $10 million from Sentinel’s “house account” during the four-year fraud, and Bloom himself made $700,000, evidence showed.
All the while, he strung key investors along by artificially boosting their returns at the expense of less favored clients.
But when the market crashed, Sentinel could not repay the huge loans Bloom had secretly used client funds to secure, and it collapsed.
Bloom, who claimed he acted in “good faith” and tried to pin the blame for wrongdoing at Sentinel on his chief financial officer, Charles Mosley, faces up to 20 years behind bars on each of 18 counts of wire fraud, and five years for investment advisor fraud.
Collection of what’s likely to be a huge fine may be complicated by Sentinel’s ongoing bankruptcy.
A sentencing date has yet to be set.