Former Long Island Investment Adviser Sentenced to 57 Months in Prison for Stealing $3 Million from Investors
Earlier today, in federal court in Central Islip, New York, Eric Erb, a former investment adviser and hedge fund manager, was sentenced by United States District Judge Arthur D. Spatt to 57 months’ imprisonment to be followed by 3 years’ supervised release. In August 2017, Erb pleaded guilty to wire fraud in connection with a scheme to defraud investors in a hedge fund and other investment vehicles that Erb managed from an office in Babylon, New York. As part of the sentence, Erb was ordered to pay $5.3 million in restitution to victims of his crime, a $5.3 million forfeiture judgment and to forfeit $215,000 in proceeds that he earned from the sale of his former residence in Bay Shore, New York.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.
“Erb blatantly lied to investors who entrusted him with their hard-earned retirement savings, stealing from them to finance his own lifestyle of country club dues, home renovations and private school tuition,” stated United States Attorney Donoghue. “This Office and our law enforcement partners are committed to holding accountable criminals like Erb who defraud the investing public.”
“Erb’s scheme had a devastating impact on his victims, leaving them to suffer financial losses directly and personal losses indirectly,” stated FBI Assistant Director-in-Charge Sweeney. “The FBI is committed to working with our law enforcement partners to ensure this type of behavior ceases to exist.”
According to court filings and facts presented at the plea hearing, between approximately January 2016 and February 2017, Erb solicited approximately $5.4 million from investors under the promise that he would follow investors’ instructions when making various investments, including in Individual Retirement Accounts, annuities, real estate investment trusts, hedge funds and an initial public offering. The victims were led to believe that their investments with Erb were earning profits, when, in fact, they were suffering losses and their investments were financing the defendant’s lifestyle of home renovations, country club dues and private school tuition. When these investments began to fail, Erb emailed investors false earnings statements showing that their investments were earning profits when, in fact, they were generating losses; made wire transfers between banks in Long Island and Florida to fund investments that investors did not authorize him to make; and falsified payee information on checks that investors wrote to fund investments so that Erb could use investors’ monies to benefit himself and his companies. During his plea allocution, Erb admitted to stealing approximately $3 million from 38 investors.
The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Bradley T. King and Madeline M. O’Connor are in charge of the prosecution.
Residence: Levittown, New York
E.D.N.Y. Docket No. 17-CR-413 (ADS)