NEW YORK (AP) -- A former partial owner of the New York Islanders pleaded guilty to securities fraud Friday, admitting his participation in a 13-year fraud that authorities said enabled him to misappropriate more than $50 million for his own use.
Stephen Walsh, 69, of Sands Point, pleaded guilty in Manhattan federal court to a charge that carries the potential for up to 20 years in prison. Sentencing was set for July 29.
From 1996 to 2009, Walsh operated a securities business with Paul Greenwood of North Salem, Conn. The businesses included Greenwich, Conn.-based WG Trading Co. LP and Westridge Capital Management Inc. in Santa Barbara, Calif.
Authorities said the men misappropriated hundreds of millions of dollars from the accounts of their clients, who included charitable and university foundations and pension plans.
''Stephen Walsh and his partner Paul Greenwood ran an investment operation that was a veritable money-making machine - for them,'' U.S. Attorney Preet Bharara said in a release. ''Their purported investing strategy wasn't nearly as effective as their fraudulent sales pitch to investors. Walsh personally pocketed tens of millions in stolen investor dollars. He will soon surrender his money and himself to answer for this fraud.''
As part of the plea, Walsh agreed to forfeit $50.7 million. He and his lawyers declined to comment as they left the courtroom of Magistrate Judge Kevin Nathaniel Fox.
Prosecutors said Walsh and Greenwood raised billions of dollars from investors for their commodities trading and investment advisory businesses. They said the men created false promissory notes and account statements to conceal their theft.
Walsh told the magistrate judge that he caused the issuance of tens of millions of dollars in promissory notes to aid the fraud.
With hundreds of millions of dollars in misappropriated money, the government said, Greenwood bought horses and collectibles while Walsh financed his lifestyle and business ventures for his children while buying an apartment and providing divorce payments of millions of dollars to his ex-wife.
Prosecutors said Walsh and Greenwood created false account statements for clients to reflect fictitious returns consistent with their promises.
Greenwood pleaded guilty in July 2010 and awaits sentencing.