Sarasota investment adviser sentenced to 5 years in prison for defrauding clients out of $6 million

A Sarasota investment adviser was sentenced to five years in federal prison on Tuesday after he defrauded clients out of nearly $6 million.

Steven Zoernack, 55, previously pleaded guilty to conspiring to commit wire fraud in March. He has been ordered to pay his victims $3.4 million in restitution, according to Acting United States Attorney W. Stephen Muldrow’s office.

U.S. District Judge Susan C. Bucklew delivered the sentence. She also ordered Zoernack to forfeit $2.8 million in ill-gotten gains.

Zoernack was the owner and operator of EquityStar Capital Management LLC, an investment advisory firm that had offices in Sarasota and Newport Beach, Calif. According to court documents, Zoernack and co-conspirators began their wire fraud scheme that amassed almost $6 million in August 2012.

But while marketing the funds, Zoernack did not disclose that he had been convicted on federal wire fraud charges in 2007; had previously filed for bankruptcy; had a history of tax liens and adverse money judgments; and still owed hundreds of thousands of dollars in restitution to past fraud victims, according to Muldrow’s office.

The FBI found that Zoernack actively worked to conceal his past, going as far as hiring an online reputation manager to manipulate search results in order to prevent potential investors from learning about his previous convictions and illegal dealings.

According to court documents, Zoernack also misappropriated fund assets for personal use by making unauthorized “salary” and “bonus” checks ranging from $12,000 to $25,000. He used these funds to make personal purchases and failed to disclose it to investors, prosecutors say.

In addition to misappropriating, Zoernack’s trading losses contributed to the loss of millions of dollars investors’ money, according to Muldrow’s office.

This story was originally published October 17, 2017 at 1:38 PM with the headline "Sarasota investment adviser sentenced to 5 years in prison for defrauding clients out of $6 million."