CEO behind biggest fraud in Chicago history gets 14 years

SHARE CEO behind biggest fraud in Chicago history gets 14 years

Eric Bloom and his wife, Lizzie, leave court last year. Bloom was on Friday sentenced to 14 years in prison for the largest financial fraud ever prosecuted in Chicago | (Sun-Times file photo)

It’s nearly a year since a jury found north suburban CEO Eric Bloom guilty of the biggest financial fraud in Chicago’s history.

But the 49-year-old financier stood up in court in front of his sobbing family Friday and defiantly announced, “I am not a thief.”

It didn’t do him much good.

Calling Bloom’s ongoing denial of criminal wrongdoing in the $665 million collapse of Sentinel Management Group “astonishing,” U.S. District Judge Ronald Guzman handed the Northbrook resident a 14-year prison sentence.

“Every working day for four years, Eric Bloom intentionally decided to lie and to steal,” Guzman said.

“He perpetrated a truly horrific fraud. . . . He simply fails to grasp what he has done.”

The sentencing hearing brought to an end a seven-year saga that began with Sentinel’s demise — a collapse that stunned Chicago’s financial world and presaged the worldwide credit crunch.

Founded by Bloom’s father, Philip, Sentinel was a cash-management firm that boasted it was a fortress that had “never lost a dime” of its clients’ cash in 30 years of low-risk business.

But Bloom dishonestly built it into a highly leveraged “house of cards” that blew away when the economy started to sour, prosecutor Clifford Histed said at the sentencing hearing on Friday.

Though he promised clients their money would be used only in conservative investments, Bloom instead used their funds as collateral for huge bank loans which, in turn, he used to make risky bets on the securities market.

He strung along key investors by artificially boosting their returns at the expense of less favored clients.

For several years, the scam made money, but when the markets tanked in 2007 and the banks came calling for their loans, it wiped Sentinel out, almost bringing down with it 12 other large institutional investors whose money it lost.

“He lied to their faces,” Histed said. “He is entirely and exclusively responsible for their losses.”

But Bloom’s lawyer, Terry Campbell, countered that Bloom had made just $800,000, at most, from the scheme.

And in a lengthy speech to the court, the balding Bloom on Friday still seemed to be in shock, blaming the markets, his employee Charles Mosley — who was later Friday sentenced to 8 years for his role in the fraud — and his own shortcomings for Sentinel’s failure, but refusing to accept that he had intended to defraud.

“I may be weak, I may be naive, I may be negligent or even incompetent, but I am not a thief,” he told the judge, as his parents, his wife, and his son and daughter watched in tears.

“I know that I am a good person and I have a sound moral compass and I have never been in any kind of trouble before,” he added.

His wife, Elizabeth, who had just married Bloom and was on honeymoon with him when Sentinel went bust, gave an emotional speech of her own, telling the judge and the prosecutors that they didn’t know the “real” Bloom.

Explaining why she had stuck by her husband, she added, “I’m just not the type of person to choose poorly.”

Guzman said he had sympathy for Bloom’s family, which Bloom has supported since his indictment by teaching horse riding. But the judge gave Bloom’s wife a blunt reply.

“Frankly, I’m surprised that the defendant would stand up here today and say that he is honest — the very man who had earned the love and respect of his friends and family lied, cheated and stole from his clients,” Guzman said.

“He grieves for their losses but never once acknowledges his responsibility.”

Bloom, who showed little reaction after the sentence was announced, was ordered to turn himself in to prison on April 13.

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