(Updates with details of Tanaka's sentence)
NEW YORK -(Dow Jones)- Ex-money manager Alberto Vilar and his business partner Gary Tanaka were sentenced to prison terms Friday after they were convicted in 2008 of bilking investors out of millions of dollars.
At a hearing Friday, U.S. District Judge Richard J. Sullivan in Manhattan sentenced Vilar, one-time head of defunct Amerindo Investment Advisors, to nine years in prison, while ordering Tanaka, a one-time Amerindo director and officer, to serve five years in prison.
On Friday, the judge found the loss to victims who testified at trial was about $21.9 million.
"People need to be able to trust their financial adviser," Sullivan said before imposing sentence.
Vilar, 69 years old, also was ordered to forfeit more than $22 million; to pay restitution of $21.9 million, plus interest; and to pay a fine of $25,000.
The judge said he expected to impose restitution and forfeiture against Tanaka, in the neighborhood of $20 million. Tanaka also was ordered to pay a $20,000 fine.
In November 2008, Vilar was convicted on securities fraud, mail fraud, wire fraud, investment-adviser fraud and money-laundering charges.
Vilar, who was subject to home confinement pending trial, was ordered detained in December 2008 and has been in custody since then.
At the time, Tanaka, 66, was convicted of conspiracy, securities fraud and investment-advisor fraud, but acquitted on nine other counts.
In a rambling statement in court Friday, Vilar defended the firm's trading strategy and said that $48 million was available to cover about $20 million in claims from victims. As a result, he said he didn't "intellectually understand" the loss amount alleged by prosecutors.
"I deeply regret any inconvenience our 14,000 clients may have suffered," Vilar said. "Fortunately, there are only five victims. I'm 95% confident they will be paid and not suffer a loss."
Prosecutors from the U.S. Attorney's office in Manhattan had alleged that Vilar, a longtime opera patron, and Tanaka misappropriated client funds for personal expenses, charitable contributions and Amerindo's operating expenses.
One of the victims was Lily Cates, the mother of actress Phoebe Cates.
The men, who were originally arrested in 2005, also had been accused by prosecutors of engaging in a scheme to defraud investors in so-called guaranteed fixed-rate deposit accounts, or GFRDAs.
During the hearing, Glenn Colton, Tanaka's lawyer, argued that his client was different from Vilar, saying Tanaka traveled coach on airlines, while Vilar traveled first class. He described the crimes Tanaka was convicted of as an "aberration."
"They're different," Colton said. "They did different things and, I submit, they should be treated different."
Prosecutors said the men didn't invest in short-term debt instruments as promised, discouraged investors from redeeming their investments and diverted money from other Amerindo clients to repay its obligations to GFRDA investors when those funds didn't perform as promised.
"The last several years--from the age of 82 to 89--have been frightful years for me," said Herbert Mayer, an 89-year-old retired surgeon and a victim of the scheme. He spoke during the hearing from a wheelchair.
Prosecutors said Mayer and his two daughters, who live in Yonkers, N.Y., suffered a loss of more than $11 million.
"They have robbed my family's hard earned fortune," said Debra Mayer, one of his daughters, in reference to Tanaka and Vilar.
Copyright 2009 Dow Jones Newswires
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