Hedge Fund Manager Gets Off Easy In Bawag Case

Jul 7 2008 | 7:47am ET

Former hedge fund manager Wolfgang Flöttl was convicted of misuse of an Austrian bank’s funds and sentenced to 2½ years in prison.

Flöttl, who was among nine convicted Friday, will only spend 10 months in prison, pending a possibly appeal. A Vienna judge suspended the rest of his sentence, reasoning that he had merely followed orders from BAWAG management to make the investments that cost the bank more than US$2 billion.

“Flöttl was a risk investor, but his contracts allowed him to due so,” Judge Claudia Bandion-Ortner said. Flöttl was convicted only in connection with damages of €97 million (US$152.4 million), while others, including former BAWAG CEO Helmut Elsner, received far longer prison terms.

Elsner, who had blamed Flöttl for the losses, was sentenced to 9½ years in prison. The judge found he was “the driving force and initiator of all this.” The other seven defendants received terms ranging up to five years.

Flöttl’s attorney said his client hoped for a “mild” sentence so he could begin repaying his debts. During the year-long trial, Flöttl said he might have broken the law by accepting loans he knew he probably couldn’t repay.

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