‘Whiz Kid’ Pleads Guilty, Admits Fraud

A 23-year-old Wall Street “whiz kid” pleaded guilty to mail and securities fraud charges Thursday, admitting that he bilked $10 million from scores of investors and spent the money on himself and friends.

“I obtained money from investors and told them I would invest their money in securities. . . . Instead, I spent the money on art, automobiles, two homes and furnishings,” David Bloom told U.S. District Judge David Edelstein.

Bloom, a 1986 graduate of Duke University, faces five years in prison and a maximum fine of double the amount lost by investors on each count.

Edelstein set sentencing for May 12. No sentencing agreement accompanied his guilty plea.

Several months before his scam was revealed, Bloom was profiled in a New York Times Sunday magazine feature on new art collectors.

According to court papers, Bloom--who was not licensed as an investment adviser--used his clients’ money to buy $5.5 million in art work, a $1.9-million East Hampton beach house, an $830,000 Manhattan apartment, $800,000 in furnishings for the two homes and two cars worth $200,000.

Investors were sent papers indicating that their investments were turning a profit, sometimes prompting them to invest more, prosecutor Robert Plotz said.

To lure additional investors, Bloom claimed to represent the Rockefeller family, the Sultan of Brunei and Bill Cosby, even though he did not.

Bloom stood with his hands behind his back at Thursday’s 25-minute hearing and politely answered Edelstein’s questions.

Asked if he realized his “money management” operation was illegal, Bloom responded in a firm voice: “Yes, your honor.”

“I said I was a money manager, but I did not invest their money as I told them I would,” he said.

All the art will be auctioned at Sotheby’s near the end of May, with the chance that some investors could still make a profit, said Bloom’s attorney, Peter Morrison.