A New York financier who stole millions of dollars from the Kentucky Retirement Systems will serve two to six years in prison.
Lawrence E. Penn III, 45, was sentenced Monday in New York State Supreme Court. He had pleaded guilty earlier to grand larceny and falsifying business records. Apart from his prison sentence, Penn must pay $8.3 million in restitution, the court ordered.
Penn's friend and co-defendant, Altura St. Michael Ewers, 44, of San Francisco, was sentenced in March to one to three years in prison for his role in the case.
Penn managed Camelot Acquisitions: Secondary Opportunities LP, a $120 million private equity fund for which KRS was one of the earliest and biggest investors in 2009, giving it more than $24 million. Penn's Camelot Group paid $780,000 in fees to placement agent Glen Sergeon, also of New York, to win KRS' business, according to state auditors in 2011. Sergeon has since died.
That investment turned out to be a costly mistake for KRS, which provides retirement benefits for Kentucky's state and local government employees.
The U.S. Securities and Exchange Commission found that Penn improperly diverted about $9.3 million from the fund to support a lavish lifestyle. KRS officials wrote off half the system's investment in Camelot as outside managers took control of the fund and tried to sort out its affairs.
"Instead of using investors' funds for due diligence services as they claimed, these defendants lined their own pockets," Manhattan District Attorney Cyrus Vance Jr. said in a statement this week. "They drained investors of more than $9 million. My office will continue to root out financial fraud and bring to justice those who would abuse the trust of investors for their own profit."