On Tuesday, it was announced that a Sarasota investment adviser had been sentenced to five years in prison for conspiring to commit wire fraud. 55-year-old Steven Zoernack has also been ordered to forfeit $2,890,518.54 in ill-gotten gains. He will also be required to pay $3,435,194.56 in restitution to his victims. The defendant pleaded guilty to the charge on March 31, 2017.

Court documents show that Zoernack owned and operated the investment advisory firm, EquityStar Capital Management LLC. Through EquityStar, Zoernack formed and managed several hedge funds, including the Momentum Growth Funds, Petroleum Black Energy Fund, and the Global Partners Funds.

Starting in August of 2012, Zoernack and his co-conspirators marketed the funds to accredited investors in the United States and Canada using offices in Sarasota and New Port Beach, California. The group managed to raise more than $6 million. While marketing the funds, Zoernack failed to disclose material facts about himself and his funds.

For instance, he failed to disclose the fact that he was previously convicted of federal wire fraud in 2007. He also failed to disclose that he had filed for bankruptcy, had a history of tax liens, and still owed hundreds of thousands of dollars in restitution to past fraud victims. Zoernack attempted to conceal his past by misappropriating fund assets to pay an online reputation manager to manipulate search engine results in hopes of hiding negative stories about his past.

The defendant often lied about his education and past performance as an investment manager. He also lied about his employees and the size of his staff. At times, Zoernack would impersonate EquityStar employees, while chatting with investors online. Finally, Zoernack lied to investors about his portfolio’s losses, ratings, profits, and returns.

After managing to convince investors to hand over their money, Zoernack began using the funds for personal purposes. None of the expenses were disclosed to investors. Due to trading losses and the misappropriation of fund assets, the defendant ultimately lost millions of dollars.

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