Daniel Calugar, a poster boy for the mutual fund trading scandals, pleaded guilty Wednesday, to defrauding investors, according to New York Attorney General Eliot Spitzer.

As part of a deal, Calugar, who owned Security Brokerage in Las Vegas, pleaded guilty to one count of felony fraud. He will be sentenced in New York State Supreme Court on March 23. He faces up to four years in prison.

"I am very happy when a guy like Calugar does time," Mercer Bullard, founder of mutual fund shareholder advocacy group Fund Democracy told the Los Angeles Times. "Far too infrequently do white-collar criminals pay their dues," he said.

Calugar's deal with Spitzer comes two weeks after he settled a case with the Securities and Exchange Commission, agreeing to pay $153 million in restitutions and fines. Calugar, 52, now lives in Ponte Verda Beach, Fla. He was unavailable for comment.

Spitzer claimed that Calugar, whose shop was in Las Vegas, but who lived in Los Angeles, cut a deal with two employees at Franklin Resources in San Mateo, Calif. The pair allowed him to make rapid trades of the Franklin Small-Mid Cap Growth fund, and waived the standard 2% penalty fee. In return, Calugar vowed to invest $10 million in a Franklin hedge fund, according to Spitzer. Spitzer said the arrangement cheated other shareholders of more than $1 million.

In October, Calugar settled a $72 million Federal class-action lawsuit brought by shareholders of the fund. Franklin settled civil charges of fraud with the SEC for $50 million in August 2004.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.