Ex-Gerova chairman gets 6-1/2 years prison over stock scam
03/08/2017 20:57
By Jonathan Stempel
NEW YORK, Aug 3 (Reuters) - The former chairman of Gerova
Financial Group Ltd GVFG.PK was sentenced on Thursday to 6-1/2
years in prison for defrauding shareholders by secretly awarding
nearly $72 million of the reinsurer's stock to himself and
others, U.S. prosecutors said.
Gary Hirst, 64, was also ordered by U.S. District Judge
Kevin Castel to forfeit about $19 million and serve one year of
supervised release, prosecutors said.
A Manhattan federal jury had convicted Hirst last September
on fraud and conspiracy charges, after a two-week trial.
Lawyers for Hirst were not immediately available for comment
on the sentencing.
Hirst was one of seven people charged over a scheme at
Gerova that prosecutors said ran from 2009 to 2011.
One of the other defendants was Jason Galanis, a former Los
Angeles investment banker once dubbed "Porn's New King" by
Forbes magazine after he had bought a credit card payment
processor for internet pornography.
Prosecutors said the Gerova scheme involved a plan to
quietly take control of nearly half of the reinsurer's public
float, and cash out profitably after bribing investment advisers
to buy shares for their own clients.
The scheme generated nearly $20 million of illegal profit,
including $2.62 million for Hirst, prosecutors said.
"Hirst and his co-conspirators issued large amounts of
stock, lied about their roles, and found other novel means to
defraud the stockholders of Gerova Financial and the investing
public," acting U.S. Attorney Joon Kim said in a statement.
Galanis was sentenced in February to 11-1/4 years in prison.
His father and two brothers also received prison terms. One
defendant remains at large. urn:newsml:reuters.com:*:nL1N1G12DR
Lawyers for Hirst had argued that factors including his
recent diagnosis of dementia had justified leniency.
(Reporting by Jonathan Stempel in New York; Editing by Lisa
Shumaker)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
Keywords: GEROVA FINANCIAL FRAUD/