Mark Lay, the Pittsburgh hedge fund manager convicted of defrauding an Ohio workers’ compensation fund of $216 million, has lost his bid for a new trial.
The U.S. Court of Appeals in Cincinnati rejected Lay’s appeal, seeking to overturn his conviction and a new trial. Lay’s legal team had argued that the trial judge’s jury instructions were improper and that there was insufficient evidence to convict their client. According to Lay’s lawyers, a hedge fund manager has a fiduciary duty only to his or her hedge fund, and not to the hedge fund’s investors.
But U.S. Circuit Judge John Rogers rejected that line of reasoning, and also affirmed the jury instructions.
Lay, the founder of hedge fund MDL Capital Management, was sentenced last year to 12 years in prison and ordered to repay the Ohio Bureau of Workers’ Compensation all $216 million. According to prosecutors, Lay invested the BWC’s money in a highly-levered hedge fund without authorization, exceeding strict limits.
Lay is just one of 19 people convicted in the BWC scandal, which included a bizarre theft from a $50 million rare-coin fund by a top state Republican fundraiser. The scandal is also credited with huge losses for Republicans in Ohio in the 2006 election, including the losses of the governor’s office and a U.S. Senate seat. Former Gov. Bob Taft was convicted of four misdemeanor ethics violations, in part in connection with the BWC scandal.