Hedge-Fund Manager With ‘Great Tan’ And Porsche ‘Getaway Car’ Sentenced To Decade In Prison For Ponzi Scheme; Judge Scolds Bradley L. Ruderman At Sentencing

After Bernard Madoff’s Ponzi scheme was exposed in December 2008, Beverly Hills hedge-fund manager Bradley L. Ruderman wrote a letter to clients assuring them them their money was safe and deploring Madoff’s “chicanery,” federal prosecutors in the Central District of California said.

“[S]uch disgraceful practices will never happen under my watch,” Ruderman declared in the letter.

Less than five months later — on April 28, 2009 — the SEC charged Ruderman, 46, with defrauding investors and lying about his Ruderman Capital Partners and Ruderman Capital Partners “A” hedge funds.

Ruderman had  falsely told investors that Lowell Milken, chairman of the Milken Family Foundation and Michael Milken’s younger brother, and Larry Ellison, chief executive officer of Oracle Corp., invested with him, the SEC said.

And “Ruderman falsely told investors that the hedge funds had earned positive returns from 15% to 60% per year and had over $800 million in assets,” the SEC said. “In reality, the hedge funds lost money and had less than $650,000 in assets.”

Criminal charges followed in May 2009. In August 2009, Ruderman pleaded guilty to two counts of wire fraud, two counts of investment adviser fraud and one count of not filing a tax return for 2007, a year in which he earned $2 million.

He was sentenced yesterday, and U.S. District Judge John F. Walter admonished Ruderman.

“He stole from individuals he knew for many years, who cared about him, had invited him into their homes and shared meals with him, who had known him since he was a child,” Walter said.

Ruderman family members and friends lost $25 million in the scheme, prosecutors said.

When Ruderman wrote the letter assuring investors he was no Madoff and that their accounts were safe, the judge said, “he was stealing their money.”

After hearing a statement from a victim that Ruderman was no different than a convenience-store thief or bank robber except he had “committed his crimes with manicured nails, a great tan, wearing an Armani suit and the getaway car was a Porsche that his victims all paid for,” Walter sentenced Ruderman to 121 months in federal prison.

Given the recent “staggering increase” in investor-advisor frauds, Walter said, he wanted to “send a message that these crimes will result in significant prison sentences.”

FBI agents who reverse-engineered the crime determined Ruderman had lost “$5.2 million of investor money in clandestine poker games held on a regular basis in a suite at a luxury Beverly Hills hotel.”

Meanwhile, the investigation revealed that Ruderman, like Madoff, had sent investors bogus account statements. At the same time, it revealed he had spent had spent at least “$8.7 million of investor money on personal expenses, including $200,000 each summer for a rented beach house in Malibu, two Porsches, $53,930 on sporting events, $896,000 in credit card charges and $327,000 in cash expenditures.”

Walter ordered Ruderman to pay nearly $26 million in restitution to victims. The FBI and IRS conducted the criminal probe.

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2 Responses to “Hedge-Fund Manager With ‘Great Tan’ And Porsche ‘Getaway Car’ Sentenced To Decade In Prison For Ponzi Scheme; Judge Scolds Bradley L. Ruderman At Sentencing”

  1. In a bizarre wrinkle to the story, the bankruptcy trustees for Rudermans’ company are seeking $300,000 from Spiderman star, Toby Maguire.

    The trustees allege Ruderman lost $5.2million to Maguire and others in illegal poker games.

    The $300,000, should it be recovered, will be returned to creditors.


  2. Hi LRM,

    Thanks for the note. I was aware of the Maguire development, but haven’t had a chance to write about it yet. The PP Blog’s Ruderman story has received a good number of readers in the past 24 hours, as offsite readers were researching the Ruderman case.