By Luc Cohen
NEW YORK — A former Allianz fund manager escaped prison Friday for his role in the collapse of private equity funds triggered by the COVID-19 pandemic, which caused losses estimated at $7 billion for investors.
Grégoire Tournant, 57, of Basalt, Colorado, pleaded guilty in June to two counts of investment adviser fraud. He agreed to forfeit $17.5 million in ill-gotten gains, including bonuses inflated by his fraud.
Chief Judge Laura Taylor Swain of Manhattan federal court sentenced him to 18 months of home confinement and three years of probation.
Tournant's defense attorneys had urged Swain to spare him prison time, citing health problems. They also said Tournant expressed remorse and called the matter less serious than the typical investment adviser fraud scheme.
“We are deeply grateful to the Court for imposing this just sentence and recognizing that incarceration was not appropriate in this case,” defense attorneys Seth Levine and Daniel Alonso said in a statement.
Prosecutors in the U.S. Attorney's Office in Manhattan had recommended that Tournant be sentenced to at least seven years in prison. They argued that more than 100 investors in Tournant's funds lost billions of dollars in their collapse and that he continued to downplay the significance of what he had done.
The case stems from the March 2020 collapse of the German insurer's now-defunct Structured Alpha funds, which Tournant created and oversaw as chief investment officer.
In May 2022, Allianz agreed to pay more than $6 billion and its U.S. asset management division pleaded guilty to securities fraud to resolve government investigations into the collapse. Two other former Allianz fund managers then pleaded guilty.
The Structured Alpha funds had relied heavily on stock options, so as to limit losses in the event of a market liquidation, which Tournant likened to a form of insurance.
Prosecutors said Tournant misled investors about the funds' risks by changing performance data and deviating from its promised hedging strategy, and obstructed a Securities and Exchange investigation. United States commission by ordering a colleague to lie.
The funds once had more than $11 billion in assets under management, but lost about $7 billion in February and March 2020 when the start of the pandemic sparked panic in global markets.
Prosecutors said the fraud ran from 2014 to March 2020, with Tournant receiving more than $60 million during that time.
(Reporting by Luc Cohen in New York; editing by Bill Berkrot)
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