Former Contrarian Capital Exec. Pleads Guilty To $9 Million Theft

Jan 30 2015 | 6:46am ET

A former Contrarian Capital Management executive pled guilty on Thursday to stealing $9 million from the Connecticut-based hedge fund.

Lawrence Herzin allegedly made at least 32 improper wire transfers from Contrarian to accounts he controlled between 2004 and 2013, including $2.4 million in August 2013 alone. The transfers “did not correspond to any legitimate payments or investments necessary to Contrarian Capital’s business,” prosecutors said.

Herzing, who served as the Greenwich, Conn.-based firm’s controller, faces up to 20 years in prison when he is sentenced in April. For now, he remains free on $5.6 million bond and has agreed to forfeit his residence and pay $1.8 million.

Contrarian, which has about $4 billion in assets, said that clients would not be affected by the theft.

“Upon discovery that a former employee misappropriated funds, Contrarian immediately commenced a review with outside advisers, reported the matter to the authorities, and is cooperating fully with their investigation,” the firm said in a statement last year.

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