Securities Fraudster Nabbed

Date: Tuesday, July 10, 2007
Author: Traderdaily.com

After several carefree years of life on the lam, 35-year-old Michael Berger (self-confessed fraudster formerly of Manhattan Investment Fund) was finally arrested in Austria.

Fugitive executives are an old story in business, with Comverse’s Jacob Alexander only the latest such example. But the tale of the hedge fund manager who had managed to stay on the run for five years after losing a $400 million bet against the tech bubble of the late 1990s ended on Friday when he was caught in Austria.

Michael Berger, an Austrian national who pleaded guilty to securities fraud in a Manhattan court in 2000, then fled in March 2002, was arrested while driving toward Salzburg, a spokesman for Austria’s federal police told the news service.

“He was in hiding. It took a quite a long time until we hit on where he was,” Gerald Hesztera said.

Mr. Hesztera identified the man only as “Michael B.,” but Vienna state prosecutor Gerhard Jarosch confirmed to Reuters that he was indeed Michael Berger, a man sought by the Federal Bureau of Investigation since 2002 for failure to appear in court.

Mr. Berger, 35, launched the Manhattan Investment Fund in 1996, but suffered enormous losses after making bearish bets on Internet and technology stocks between 1996 and 1999, at the height of the market bubble. Manhattan Investment closed in January 2000, just before the bubble burst.

But prosecutors accused him of raising more than $575 million from investors by overstating the performance and market value of his fund’s holdings.