Michael Lauer, the founder of defunct hedge fund shop Lancer Management Group, has been found liable for fraud, the Securities and Exchange Commission said.

A federal judge in Miami found that Lauer’s fraud was “egregious, pervasive, premeditated and resulted in the loss of hundreds of millions of dollars.” The SEC is seeking fines and disgorgement of about $500 million. Lauer and four others still face criminal charges, and he could face as much as 25 years in prison if convicted.

According to the SEC, Lauer and his cohorts used shell companies to inflate the value of the Lancer hedge funds. The scheme allegedly cost investors, including a Connecticut state pension fund, more than $200 million from 1999 through 2003.

As a further indignity, Lauer’s Greenwich, Conn., mansion is set to be auctioned off by the Internal Revenue Service tomorrow. A second open house is being held today.