Hedge-fund manager gets probation

Former hedge-fund manager Jonathan Daws was sentenced to three years probation and a $50,000 fine Wednesday for his part in a stock scheme to depress the price of penny stocks.

Daws managed Dallas-based hedge fund Gryphon Partners LP until late 2002. He was charged in June 2003 and pleaded guilty to conspiracy to commit securities fraud in April 2005.

The U.S. government and Daws had agreed in his plea deal to imprisonment of 18 to 24 months. But Daws' lawyers argued in a sentencing memorandum in July that prison was unwarranted and that a noncustodial sentence would be appropriate in light of his exemplary family background and character, the limited nature of his criminal conduct and certain family circumstances. The government didn't oppose Daws' request for release based on his family circumstances.

'This was a colossal misjudgment on your part, but your family circumstances are very compelling, ' Judge Raymond Dearie told Daws in open court. 'I'm not going to send you to jail,' Dearie told Daws, adding later 'don't make a fool out of me.' Dearie also sentenced Daws to 500 hours of community service.

Daws was charged as part of a conspiracy to use public information misappropriated from U.S. government databases to manipulate the stocks of small companies. Other members of the conspiracy included short seller Anthony Elgindy and former Federal Bureau of Investigation special agent Jeffrey Royer. Both were both found guilty of racketeering conspiracy and securities fraud in January 2005.

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