Friday, 1 August 2014
Last updated 5 hours ago
Jul 7 2008 | 7:33am ET
Hedge fund manager Mark Lay will learn his fate tomorrow, when a federal judge is set to sentence him for losing $216 million for an Ohio pension.
Lay, the founder and president of Pittsburgh-based MDL Capital Management, faces as much as 20 years in prison. He was convicted of defrauding the Ohio Bureau of Workers’ Compensation in October, part of a scandal that rocked the state’s political world.
U.S. District Judge David Dowd will hear arguments from both Lay’s attorneys and the government before handing down a sentence. At a Thursday hearing, Lay pleaded his case, denying allegations that he mismanaged the money or tried to hide losses.
“I felt rates would go up and add tremendous benefit to the state of Ohio’s portfolio,” he said. “There were not self-motivating factors or malicious intent.”
According to prosecutors, the huge loss was the result of rogue investing on the part of Lay, who they say invested the money in a highly-levered hedge fund without authorization.
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.