Ex-BDO Seidman’s Mark Bloom Pleads Guilty in Hedge Fund Fraud

Date: Friday, July 31, 2009
Author: David Glovin, Bloomberg

Hedge fund manager Mark Bloom pleaded guilty to U.S. charges that he stole at least $20 million from clients and lied to them, and that he helped sell illegal tax shelters while working earlier at BDO Seidman LLP.

Bloom, who lives in New York City, pleaded guilty yesterday in federal court in Manhattan to five charges including securities fraud. He admitted he stole millions from investors in North Hills Fund, an investment partnership with more than $30 million in assets that he managed. He agreed to forfeit as much as $20 million and to cooperate with prosecutors in their continuing investigation.

“I committed securities fraud,” Bloom, 57, told U.S. District Judge John Koeltl in New York. “I committed mail fraud.”

Bloom’s arrest in February came on the same day that prosecutors separately charged two fund managers of WG Trading Co., a broker-dealer in Greenwich, Connecticut, with conspiring to defraud investors in a $550 million fraud scheme. Those two, Paul Greenwood and Steven Walsh, have denied the charges. Bloom once worked for them. He faces as long as 73 years in prison, although he will receive much less under sentencing guidelines.

WG Trading also had offices in North Hills, New York, and Jersey City, New Jersey, according to the indictment.

Tax shelters

Federal prosecutors said Bloom’s fraud operated from 2001 until February. They said he told investors that North Hills’ assets would be diversified among hedge funds. Starting in February 2004, they said, Bloom concentrated at least 50 percent of his fund in a commodities trading pool known as the Philadelphia Alternative Asset Fund and waited more than a year before telling investors.

Bloom admitted that he stole investors’ money, sent them phony account statements, used funds from new investors to pay existing ones, and laundered cash to finance a lavish lifestyle. He said he used client money to buy artwork for a home in the Hamptons, a Manhattan apartment and jewelry.

As part of his guilty plea, Bloom, a certified public accountant, said he helped sell illegal shelters to wealthy clients when he rejoined BDO Seidman, an accounting firm, in 2001. Three other BDO Seidman executives have pleaded guilty in the expanding shelter case, including former Vice Chairman Charles Bee.

Bloom will be sentenced on Dec. 4. His assets have been frozen, and he was represented at the court hearing by a public defender.

The case is U.S. v. Bloom, 09-cr-367, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York federal court at dglovin@bloomberg.net.