Venezuelan hedge fund manager to learn sentence for massive Connecticut fraud scheme

Nearly four years after he confessed to running a massive fraud scheme, a former hedge fund manager is expected to be sentenced in a Connecticut case that had its biggest fallout in Venezuela, where the state oil company had hundreds of millions of dollars invested with the disgraced financier.

Francisco Illarramendi pleaded guilty in March 2011 to several counts of fraud and conspiracy to obstruct justice.

As the director of several funds in Stamford, prosecutors say Illarramendi lied repeatedly to investors and creditors as he tried to cover up investment losses exceeding half a billion dollars, taking $20 million for himself including $5 million to build a lavish home in New Canaan. A court-appointed receiver recovered much of the money but prosecutors say losses still exceed $200 million.

Prosecutors have urged U.S. Judge Stefan Underhill in Bridgeport to sentence Illarramendi to at least 12 years in prison on Thursday. Illarramendi argues he deserves no more than six months of home confinement in addition to the time he's already spent in jail. He was initially free on bail but Underhill ordered him locked up after the court discovered in January 2013 that he spent a state tax refund without disclosing it.

The 45-year-old son of a former Venezuelan diplomat, Illarramendi has lived in the U.S. for years and developed an expertise in Latin American financial markets, serving for a time as an adviser to Venezuela's oil company. As part of the fraud, prosecutors say, Illarramendi paid millions of dollars in bribes to Venezuelan government officials to reward them for steering the oil company's money to him for investment.

Venezuelan officials have said that the state oil company, Petroleos de Venezuela, ended a contract with Francisco Illarramendi in 2004, a year before the scheme began.