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US: Formerly Lavish Music Patron Is Convicted of Fraud


by DANIEL J. WAKINThe New York Times
November 19th, 2008

Alberto W. Vilar, the investor and music lover accustomed to opulent living, front-row opera seats and the gratitude of arts impresarios, now faces a more humble prospect: prison.

A federal jury in Manhattan on Wednesday convicted him of defrauding clients of his firm, Amerindo Investment Advisors, finding him guilty on all 12 counts. The jury also convicted his former business partner, Gary A. Tanaka, on 3 of the 12 counts.

As the foreman of the jury pronounced the first verdict, the 67-year-old Mr. Vilar blinked once but remained stone-faced throughout the recitations of “guilty,” looking down at the table in front of him. Outside the courtroom, when Mr. Vilar was asked what had gone wrong, he said softly, “I don’t know.”

His lawyer, Herald Price Fahringer, promised an appeal. “We’re deeply disappointed in the jury’s verdict,” he said. “We expect to be fully vindicated on appeal.”

The verdict came after a two-month trial and three and a half days of often heated deliberations. Raised voices were heard inside the jury room at one point. A juror sniffled as she left the courtroom. One juror said there was name-calling during deliberations, Bloomberg News reported.

The two men were charged in a 12-count indictment alleging conspiracy and securities fraud, investment adviser fraud, mail fraud, wire fraud, making false statements and money laundering. Mr. Tanaka, 65, was found guilty of conspiracy, securities fraud and investment adviser fraud.

Glenn C. Colton, Mr. Tanaka’s lawyer, said the nine not-guilty counts showed how troubled the jury was in deciding what role his client played.

The more serious counts carry up to 20 years in prison. The judge, Richard J. Sullivan, did not set a sentencing date and both defendants remain free on bail, but the judge said he would hear arguments on changing bail conditions on Nov. 26.

Prosecutors charged that Amerindo gambled with clients’ money in volatile technology stocks instead of the safe investments the defendants promised. When the market plunged in 2000, shriveling Amerindo’s holdings, the defendants lost millions of dollars of clients’ money, prosecutors said. They turned to fraud to pay expenses and satisfy other customers who were demanding their money back, the government said.

According to one of the more lurid accusations, an Amerindo employee in London cut and pasted the signature of a client, Lily Cates, to loot her account of $250,000 so Mr. Vilar could pay his mortgage and avoid foreclosure. Ms. Cates, the mother of the actress Phoebe Cates, also said she was swindled of $5 million.

The defense argued that the investors did not actually lose money until the authorities froze the business with their arrests in May 2005, and that in fact other clients, like the Los Angeles and Chicago Police Department pension funds, made big profits.

The verdict was the last movement in Mr. Vilar’s fall from grace, which began in 2002 when it became public that he had reneged on a series of promises to give millions of dollars to the Metropolitan Opera, the Lyric Opera of Chicago, the Los Angeles Opera, the Washington National Opera and others.

When he failed to make the donations, institutions erased his name. The Met removed it from the grand tier and the Washington National from its young artists program. His alma mater — Washington and Jefferson College — and New York University and Columbia University also did not receive promised donations.

Before the trial began, Mr. Vilar blamed his high profile as a major benefactor for drawing the attention of prosecutors. And he expressed bitterness that many of his professed friends in the cultural world melted away after his troubles became public.

Despite the failed promises, Mr. Vilar still ranks as a major donor, having given as much as $100 million. He often demanded prominent recognition, which he said was a way of encouraging other wealthy people to give. Some acquaintances suggested he was really striving for attention and legitimacy.

Tall and reserved and rarely without a suit and tie, Mr. Vilar was a familiar sight at opera houses. His seat at the Met was A-101, in the first row. Throughout the trial, Mr. Vilar lived in splendid isolation in his condominium, with its larger-than-life-size bronze statue of a young Mozart, gold brocade drapes and marble floor.

Much of the case centered on a $5 million investment by Ms. Cates, a longtime friend of Mr. Vilar’s and one of his earliest clients. Prosecutors charged that Mr. Vilar, desperate for funds, induced her to put the money in a new small-business investment fund backed by the government.

Evidence showed that Mr. Vilar never had approval to open the fund. The money was routed to a corporate checking account and to Mr. Vilar’s personal account so he could fulfill pledges to Washington and Jefferson and the American Academy in Berlin, prosecutors said. Most went toward a settlement with other clients who were seeking their money back, prosecutors told the jury.





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