By Luc Cohen
NEW YORK – A former Allianz (ETR ) fund manager was spared jail on Friday for his role in a private equity fund crisis sparked by the COVID-19 pandemic that caused an estimated $7 billion in losses to investors. .
Gregoire Tournant, 57, of Basalt, Colorado, pleaded guilty in June to two counts of investment advisor fraud. He agreed to forfeit $17.5 million in ill-gotten gains, including inflated bonuses from his fraud.
Chief Judge Laura Taylor Swain of federal court in Manhattan sentenced him to 18 months of home confinement and three years of probation.
Tournant's defense lawyers had urged Swain to spare him prison time, citing health problems. They also said Tournant had expressed remorse and called the case less serious than the typical investment adviser fraud scheme.
“We deeply thank the Court for imposing this fair sentence and recognizing that incarceration was not appropriate in this case,” defense attorneys Seth Levine and Daniel Alonso said in a statement.
Prosecutors with the U.S. attorney's office in Manhattan had recommended that Tournant be sentenced to at least seven years in prison. They argued that more than 100 investors in Tournant's funds lost billions of dollars when they collapsed and that he continued to downplay the importance of what he had done.
The case arose from the March 2020 collapse of the German insurer's now-defunct Structured Alpha funds, which Tournant had created and overseen as chief investment officer.
In May 2022, Allianz agreed to pay more than $6 billion and its U.S. asset management unit pleaded guilty to securities fraud to resolve government investigations into the collapse. Two other former Allianz fund managers pleaded guilty at the time.
Structured Alpha funds had bet heavily on stock options, in a way designed to limit losses in a market sell-off, which Tournant likened to a form of insurance.
Prosecutors said Tournant misled investors about the funds' risks by altering performance data and deviating from his promised hedging strategy, and obstructed a U.S. Securities and Exchange Commission investigation by ordering a colleague to lied
The funds once had more than $11 billion in assets under management, but lost about $7 billion in February and March 2020 as the onset of the pandemic sparked global market panic.
Prosecutors said the fraud ran from 2014 to March 2020, and that Tournant received more than $60 million during that time.
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