That's Why They Call It Prison, Frank
Frank Gruttadauria was sent back to prison in August after he apparently went for a walk — right out the front door of the facility where he's serving a seven-year sentence for stealing $115 million from clients. The former broker from SG Cowen and Lehman was visiting his ex-wife when local authorities arrested him in early July. On August 6, a judge sent the 49-year old back to the Oriana House — not a jail per se, but a rehabilitation and transition facility for inmates.
Gruttadauria vanished from his home in January 2002 after leaving the FBI a letter describing the scam that made him millions. He turned himself in a month later, and was convicted in November of that year. Before he was sent back to Oriana this summer, Gruttadauria told the judge he was being harassed by the prosecutor's office. He said they only became interested in his whereabouts when local media began telling the public he was out and about in the community.
Assistant Cuyahoga County Prosecutor Steven Dever begged to differ, according to news reports: “No one ever contemplated that community control sanctions, or the program he was allowed to participate in, would allow him to go home on weekends and have free liberty … it's always been the intention that Mr. Gruttadauria go to jail — and stay in jail.” Under his original plea agreement the earliest he could be released from prison is March 10, 2008.
Jailtime For Fraudulent Hedgies
Anthony Postiglione Jr. and William Lennon, the principals of Fountainhead Asset Management (the hedge fund they founded), were both sentenced in August to hard time for defrauding investors. The men pleaded guilty to charges that they misrepresented the risks of the fund to early investors, as well as created and sent false and misleading account statements and newsletters to investors representing that the fund was making money when it was not.
Postiglione was sentenced to 60 months in jail, followed by three years of supervised release, including six months of that time spent in a community facility. He was also ordered to pay $1.6 million in restitution. Lennon, who cooperated with the government's criminal investigation as well as the SEC's investigation, was given one year and one day in prison, followed by three years of supervised release. He too was ordered to pay $1.6 million in restitution.