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Ex-Hedge Fund Manager Lay Gets 12 Years


Date: Wednesday, July 9, 2008
Author: FINalternatives

Mark Lay, the Pittsburgh hedge fund manager convicted of fraud in a scandal that cost an Ohio workers’ compensation fund $216 million, has been sentenced to a dozen years in prison.

After a marathon 10-hour, two-day sentencing hearing—U.S. District Judge David Dowd complained it was the longest he had ever been a part of—Lay was sent straight to prison. In addition to the jailtime, Dowd ordered the founder of MDL Capital Management to pay back all $216 million he was accused of losing in highly-levered hedge funds he invested in without authorization.

Lay, whose attorney said he would appeal, arguing that the jury, and not the judge, should have determined the total loss to the Ohio Bureau of Workers’ Compensation, continues to maintain that the losses came in spite of an honest effort to turn a profit for the BWC.

Lay is just one of 19 people convicted in the BWC scandal, which included a bizarre theft from a $50 million rare-coin fund by a top state Republican fundraiser. The scandal is also credited with huge losses for Republicans in Ohio in the 2006 election, including the losses of the governor’s office and a U.S. Senate seat. Former Gov. Bob Taft was convicted of four misdemeanor ethics violations, in part in connection with the BWC scandal.