By Luc Cohen
NEW YORK — A former Allianz fund manager was spared jail time Friday for his role in a collapse of private investment funds fueled by the COVID-19 pandemic that caused an estimated $7 billion in investor losses.
Gregoire Tournant, 57, of Basalt, Colorado, pleaded guilty in June to two counts of investment advisor fraud. He agreed to give up $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 house arrest and three years of probation.
Tournant’s lawyers had urged Swain to spare him jail time, citing health problems. They also said Tournant had expressed remorse and called the case less serious than typical investment adviser fraud.
“We are deeply grateful to the Court for imposing this just sentence and for recognizing that incarceration was not appropriate in this case,” attorneys Seth Levine and Daniel Alonso said in a statement.
Prosecutors from 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 a hundred investors in Tournant’s funds lost billions of dollars when they collapsed, and that he continued to downplay the significance of what he had done.
The case stemmed from the March 2020 collapse of the German insurer’s now-defunct Structured Alpha funds, which Tournant founded and oversaw as chief investment officer.
In May 2022, Allianz agreed to pay more than $6 billion and its U.S. asset management unit pleaded guilty to securities fraud to resolve government investigations into the collapse. Two other former Allianz fund managers pleaded guilty at the time.
The Structured Alpha funds had bet heavily on stock options in a way designed to limit losses in a market sell-off, which Tournant likened to a form of insurance.
Prosecutors said Tournant misled investors about the funds’ risks by changing performance data and deviating from his promised hedging strategy, and obstructed a U.S. Securities and Exchange Commission investigation by directing 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 as the onset of the pandemic caused a global market panic.
Prosecutors said the fraud ran from 2014 through March 2020, with Tournant receiving more than $60 million during that time.
(Reporting by Luc Cohen in New York; Editing by Bill Berkrot)
