Convicted In U.S., Accused Hedge Fund Fraudster Goes Free In Austria

Date: Wednesday, April 29, 2009
Author: FINalternatives

Michael Berger, the convicted hedge fund fraudster, has been released from prison in his native Austria two years after the former fugitive was captured.

Austrian prosecutors say they will be unable to file charges against Berger, who pleaded guilty to securities fraud charges in New York in 2000, before a June deadline. The prosecutors approved his release, and he was freed on Friday after surrendering his passport and promising to face charges if and when they are filed.

“He had been in detention for a very long time,” Gerhard Jarosch, a spokesman for the Austrian prosecutors’ office. “He was released on the basis of his pledge to face possible charges in court.”

What that pledge is worth is certainly in question: Berger, who faced up to 10 years in prison and a $1.25 million fine in the U.S., fled in 2002. He spent the following five years keeping a low profile at his parents’ home in Austria, before he was arrested in 2007.

Berger pleaded guilty to overstating both the performance and asset level of his New York-based Manhattan Investment Fund. More than two-thirds of the $575 million he raised disappeared during the dot-com boom, which Berger bet against from 1996 to 1999. But he has since sought to withdraw the plea, claiming he was tricked into it and was mentally incompetent at the time. A motion to that affect was rejected by the U.S. courts.

Jarosch said Austrian authorities still hoped to bring charges against Berger, but would not predict when they might come.