The U.S. District Court in Tampa, Fla. has convicted Steven Adler, former president of Vector Index Advisors and manager of the ASM Index 30 Fund, of misappropriating $1.9 million from 11 investors [see MFMN 12/03/01].
The court found Adler guilty of 20 counts of mail and wire fraud. Instead of investing the $1.9 million that Adlers investors intended for the ASM Index 30 Fund, the fund manager used some of the money to pay company expenses, the court charged. Adler then mailed fictitious statements to make it appear that the money had been invested, according to the court. In other cases, the court charged, Adler invested the funds but then illegally instructed the funds investment advisor to transfer the monies to a bank account that he controlled.
Each of the 20 counts against Adler carries a maximum penalty of five years imprisonment and a $250,000 fine. However, the judges ultimate decision will be based on a pre-sentence report, according to a spokesman for the court. Adler will be sentenced on Aug. 9.
The ASM Index 30 Fund, founded in 1991, tracked the Dow Jones Industrial Average and catered to investors interested in market timing. Vector Index Advisors ceased operations soon after the funds board terminated Vector as advisor in early 1999. Assets were then merged with the Orbitex Focus 30 Fund.
The Securities and Exchange Commission last November barred Adler from ever working with an investment company again. The SEC at that time also ordered Adler to repay investors their money, plus interest, but after discovering that he had filed for bankruptcy in 1999, the commission waived payment as well as a civil fine.