Regulator Sues Failed Sentinel Money Manager

NEW YORK -- The Commodity Futures Trading Commission is suing an Illinois money-management firm, claiming fraud and fund segregation violations, The Wall Street Journal reported Monday.

The suit, filed April 28 in the U.S. District Court for the Northern District of Illinois, alleges that Sentinel Management Group Inc. misused customer segregated funds by "commingling" its assets with its customers' assets and using as much as $444 million in customer funds to securitize a loan with the Bank of New York, the paper reported.

The suit alleges that Sentinel President Eric A. Bloom and Senior Vice President Charles K. Mosley aided and abetted in the misuse of funds. It also alleges that the company filed false reports to the CFTC by stating that it had no accounts payable from September 2005 through July 2007, the paper reported.

The suit seeks a permanent injunction against the firm, as well as civil penalties against Bloom and Mosley and repayment of funds to investors, the paper reported.

According to the paper Terence Campbell, an attorney for Bloom, said: "We strongly contest that Eric Bloom did anything knowingly or intentionally wrong." An attorney for Sentinel's bankruptcy trustee couldn't be reached to comment Friday by the paper. A lawyer for Mosley declined to comment to the paper.

-- NYSSCPA.org News Staff

Posted on 5/5/08