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Ex-Citadel Analyst Gets Over Four Years in Prison for Hedge Fund Covid Scam

·2 min read

(Bloomberg) -- A former analyst at Citadel was sentenced to more than four years in prison for scamming millions of dollars in Covid relief loans for his startup hedge fund, most of which he lost in the market.

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Gregory Blotnick, 35, was sentenced on Tuesday to 51 months behind bars by a federal judge in Newark, New Jersey, and ordered to pay $4.6 million in restitution. He pleaded guilty in October to wire fraud and money laundering charges for submitting 21 fraudulent loan applications to 13 lenders under the Paycheck Protection Program of the March 2020 Covid-19 economic stimulus bill.

Blotnick worked as an analyst at Citadel for less than a year and was let go in 2018, according to Zia Ahmed, a spokesman for the firm. He founded Brattle Street Capital LLC in 2019, according to an SEC filing.

Defense lawyer Adam Kaufmann said Blotnick accepted full responsibility for his actions and had taken steps to make things right.

“Mr. Blotnick will serve his time with dignity and looks forward to becoming a contributing member of society when his sentence is completed,” Kaufmann said.

Read More: Hedge Fund Managers Claiming Bailouts as Small Businesses

Blotnick, a resident of New York and Palm Beach, Florida, sought $6.8 million in loans and received about $4.6 million, prosecutors said. He went on to deposit much of the money in brokerage funds and lost more than $3 million in unsuccessful stock trades.

From April 2020 through March 2021, prosecutors said, Blotnick falsified information about Brattle Street in his PPP loan applications, telling one bank the fund employed 45 people, with a monthly payroll of more than $325,000. In reality, according to the government, Brattle Street paid no wages at all in 2019 or 2020.

Blotnick was also sentenced to two years of supervised release.

The federal sentence may not be the only prison time he gets. According to court records, Blotnick pleaded guilty in October to similar charges brought by the Manhattan district attorney’s office. He faces a possible state court sentencing on Thursday.

Kaufmann said Blotnick is expected to get a sentence of one to three years on the state charges, to run concurrent with the federal term.

The case is US v. Blotnick, 21-cr-796, U.S. District Court, District of New Jersey (Newark.)

Read More: Covid-Linked Patient Scams Tally $292 Million, DOJ Says

(Adds details in second, sixth and seventh paragraphs. An earlier version of this article misstated gender of spokesman in third paragraph.)

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