Jan. 30--The onetime leader of a well-connected Northbrook money management firm was sentenced Friday to 14 years in prison for defrauding clients of more than $665 million in what prosecutors believe is the largest fraud case ever brought in federal court in Chicago.
Prosecutors sought 20 years in prison for Eric Bloom, 49, who was convicted by a jury last March on 18 counts of wire fraud and one count of investment adviser fraud stemming from the spectacular collapse of Sentinel Management Group Inc. in 2007.
In a seven-page letter sent recently to U.S. District Judge Ronald Guzman, Bloom wrote he felt like he's been living the past seven years in a "surreal state, as though I'm watching the unraveling of someone else's life instead of my own."
He also wrote that he'd always tried to run Sentinel to the best of his ability and that since its collapse he has been "tormented" by thoughts of the financial losses his clients sustained, as well as the "humiliation, loss of reputation, and other emotional suffering" he has endured. Bloom said he'd always considered himself to be "a man with a sound moral compass."
"I correct errors on restaurant checks when they are in my favor," Bloom wrote. "I don't even have speeding or parking tickets on my record. In other words, I always strive to follow the rules."
Prosecutors alleged that as head of Sentinel, Bloom secretly began exposing his well-heeled customers to an increasingly risky mix of leveraged deals in 2003, leading to the company's spectacular collapse four years later.
According to the charges, Bloom and Charles Mosley, Sentinel's head trader, pledged hundreds of millions of dollars worth of client funds as collateral for a multimillion-dollar bank loan. The money from the loan was then used to purchase high-risk securities for a "house" trading portfolio that benefited Sentinel's officers, including Mosley, Bloom and Bloom's father, Philip, who founded the company in the 1970s but was not charged with wrongdoing.
Prosecutors said the younger Bloom and Mosley never told clients how much risk they were being exposed to and used false account statements to lull them into pouring more money into Sentinel. As the heavily leveraged trading strategy went awry amid the global mortgage crisis, emails and phone calls showed a jittery Bloom growing increasingly desperate, they said.
"Ask (my assistant) to look in my couch for spare change," Bloom was quoted in court filings as telling Mosley during a call days before Sentinel's collapse.
Mosley, 50, of Vernon Hills, pleaded guilty in October to two counts of investment adviser fraud and is scheduled to be sentenced Friday shortly after Bloom. He had agreed to cooperate against Bloom, but prosecutors never called him to testify at trial.
Assistant U.S. Attorney Clifford Histed told the jury that Sentinel was "sinking like the Titanic" well before the global credit crisis and that merely exposed the fraud Bloom had been carrying out for years.
Bloom's attorney, Theodore Poulos, argued that Bloom was making decisions in a complex financial market without the "benefit of hindsight" like prosecutors.
He said the fact that Sentinel was using clients' funds to leverage other loans was properly disclosed in documents and included in contract language sent to investors by the firm.
After hearing more than four weeks of evidence, the jury acted swiftly, deliberating only about two hours before finding Bloom guilty on all counts.
Bloom, who has remained free on a $100,000 bond secured by his Northbrook home since the conviction, wrote in his letter to Guzman he's fearful of the impact a lengthy prison sentence will have on his family, particularly his wife, Elizabeth, and their 6-year-old daughter.
He told the judge his "entire net worth" disappeared with Sentinel's collapse.
jmeisner@tribune.com
Twitter @jmetr22b
