US: Formerly Lavish Music Patron Is Convicted of Fraud

Publisher Name: 
The New York Times

Alberto W. Vilar, the investor and music lover accustomed to opulent living, front-row opera seats and the gratitude of arts impresarios, now faces a more humble prospect: prison.

A
federal jury in Manhattan on Wednesday convicted him of defrauding
clients of his firm, Amerindo Investment Advisors, finding him guilty
on all 12 counts. The jury also convicted his former business partner,
Gary A. Tanaka, on 3 of the 12 counts.

As the foreman of the jury
pronounced the first verdict, the 67-year-old Mr. Vilar blinked once
but remained stone-faced throughout the recitations of "guilty,"
looking down at the table in front of him. Outside the courtroom, when
Mr. Vilar was asked what had gone wrong, he said softly, "I don't
know."

His lawyer, Herald Price Fahringer, promised an appeal.
"We're deeply disappointed in the jury's verdict," he said. "We expect
to be fully vindicated on appeal."

The verdict came after a
two-month trial and three and a half days of often heated
deliberations. Raised voices were heard inside the jury room at one
point. A juror sniffled as she left the courtroom. One juror said there
was name-calling during deliberations, Bloomberg News reported.

The
two men were charged in a 12-count indictment alleging conspiracy and
securities fraud, investment adviser fraud, mail fraud, wire fraud,
making false statements and money laundering. Mr. Tanaka, 65, was found
guilty of conspiracy, securities fraud and investment adviser fraud.

Glenn
C. Colton, Mr. Tanaka's lawyer, said the nine not-guilty counts showed
how troubled the jury was in deciding what role his client played.

The more serious counts carry up to 20 years in prison. The judge,
Richard J. Sullivan, did not set a sentencing date and both defendants
remain free on bail, but the judge said he would hear arguments on
changing bail conditions on Nov. 26.

Prosecutors charged that
Amerindo gambled with clients' money in volatile technology stocks
instead of the safe investments the defendants promised. When the
market plunged in 2000, shriveling Amerindo's holdings, the defendants
lost millions of dollars of clients' money, prosecutors said. They
turned to fraud to pay expenses and satisfy other customers who were
demanding their money back, the government said.

According to
one of the more lurid accusations, an Amerindo employee in London cut
and pasted the signature of a client, Lily Cates, to loot her account
of $250,000 so Mr. Vilar could pay his mortgage and avoid foreclosure.
Ms. Cates, the mother of the actress Phoebe Cates, also said she was swindled of $5 million.

The
defense argued that the investors did not actually lose money until the
authorities froze the business with their arrests in May 2005, and that
in fact other clients, like the Los Angeles and Chicago Police
Department pension funds, made big profits.

The verdict was the
last movement in Mr. Vilar's fall from grace, which began in 2002 when
it became public that he had reneged on a series of promises to give
millions of dollars to the Metropolitan Opera, the Lyric Opera of Chicago, the Los Angeles Opera, the Washington National Opera and others.

When
he failed to make the donations, institutions erased his name. The Met
removed it from the grand tier and the Washington National from its
young artists program. His alma mater - Washington and Jefferson
College - and New York University and Columbia University also did not receive promised donations.

Before
the trial began, Mr. Vilar blamed his high profile as a major
benefactor for drawing the attention of prosecutors. And he expressed
bitterness that many of his professed friends in the cultural world
melted away after his troubles became public.

Despite the failed
promises, Mr. Vilar still ranks as a major donor, having given as much
as $100 million. He often demanded prominent recognition, which he said
was a way of encouraging other wealthy people to give. Some
acquaintances suggested he was really striving for attention and
legitimacy.

Tall and reserved and rarely without a suit and tie,
Mr. Vilar was a familiar sight at opera houses. His seat at the Met was
A-101, in the first row. Throughout the trial, Mr. Vilar lived in
splendid isolation in his condominium, with its larger-than-life-size
bronze statue of a young Mozart, gold brocade drapes and marble floor.

Much
of the case centered on a $5 million investment by Ms. Cates, a
longtime friend of Mr. Vilar's and one of his earliest clients.
Prosecutors charged that Mr. Vilar, desperate for funds, induced her to
put the money in a new small-business investment fund backed by the
government.

Evidence showed that Mr. Vilar never had approval
to open the fund. The money was routed to a corporate checking account
and to Mr. Vilar's personal account so he could fulfill pledges to
Washington and Jefferson and the American Academy in Berlin,
prosecutors said. Most went toward a settlement with other clients who
were seeking their money back, prosecutors told the jury.

AMP Section Name:Financial Services, Insurance and Banking