Michael Berger, whose hedge fund went bust in January 2000 and lost $400 million and who has been a fugitive since March 2002, was caught and arrested in Austria last week, according to Reuters.

Berger, 35, launched Manhattan Investment Fund in 1996, and the fund suffered huge losses when Berger bet against technology and Internet stocks between 1996 and 1998.

Austrian native Berger pled guilty to charges of securities fraud in a Manhattan court in 2000 and then fled to Austria. He was caught last week while driving toward Salzburg.

“He was in hiding. It took quite a long time until we hit on where he was,” said Gerald Hesztera, a spokesman Austria’s federal police. “We were seeking him for five years, together with the FBI,” he said.

In the 1990s, Berger raised $575 million from investors by overstating the performance and market value of the hedge fund’s holdings, prosecutors stated in proceedings against Berger in 2000.

He admitted in his guilty plea that he sent out deceptive statements to investors. He tried retracting the plea a year later, stating that he was mentally incompetent at the time he admitted guilt. A judge rejected his motion, stating that there was no evidence that he was not competent at the time of his plea.

He was released on bail but did not show up at court for his March 1, 2002 sentence hearing.

Since Berger is an Austrian national, he cannot be sent back to the U.S., where he would face up to 10 years in jail and minimum fines of $1.25 million plus reimbursement. Nonetheless, Vienna-based Bank Austria lost money in his scheme and has charged him with fraud as well. 

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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