Melhado Flynn Chief Sentenced To Eight Years For Fraud

Apr 30 2010 | 12:02pm ET

The head of Long Island investment firm Melhado Flynn & Associates was sentenced to 8 years in prison for illegally cherry-picking profitable trades for two hedge funds he controlled.

George Motz, who pleaded guilty in October to favoring his firm’s proprietary accounts and the hedge fund accounts he controlled over those of MFA’s clients, had faced up to 25 years in prison. His scheme wound up costing his firm’s clients $1.4 million while enriching the proprietary and hedge fund accounts, one of which was called Third Millennium, by $2.2 million.

Of the 204 trades Motz assigned—often just before the market closed, after it became clear how successful the move was—to MFA’s proprietary account, 202 proved profitable.

Motz was ordered to surrender to authorities on June 30 to begin his sentence. He was also fined $20,000.

The 67-year-old, in addition to running a fraud, also formerly served as mayor of Quogue, N.Y., a village of about 1,000 in Long Island’s tony Hamptons area.

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