Bankrupt Money Manager Lawsuit

Former officers to pay $10.7 million settlement in fraud lawsuit.

Bankrupt Money Manager

Chicago, IL: (May-16-08) Trustee of Northbrook-based Sentinel Management Group Inc., the now bankrupt cash-management firm, Frederick Grede, brought charges against Sentinel founder and Chairman Philip Bloom and his son, Chief Executive Eric Bloom, accusing the top two former executives of engaging in a long-term, massive fraud against the company and its customers.

Court papers reveal that Sentinel filed for Chapter 11 bankruptcy in August 2007, freezing investor assets, citing credit market instability. Following that, Grede filed a $350 million suit against Philip and Eric Bloom in October 2007. Apart from this suit, the US Securities and Exchange Commission also has sued Sentinel, claiming that the company used hundreds of millions of dollars of client securities without their knowledge as collateral to obtain a $321 million line of credit from Bank of New York Mellon Corp. Grede sued Bank of New York Mellon in March 2008, seeking $550 million, claiming bank officials helped cause Sentinel's collapse.

As part of a settlement reached with the father -son duo, sources stated that the two paid $10.7 million to resolve allegations. Grede stated that the $10.7 million settlement represents substantially all the assets of the settling defendants, other than assets, which are or claimed to be exempt. [CHICAGO TRIBUNE: SENTINEL SETTLEMENT REACHED]

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