Convicted Ponzi scheme operator Michael Regan, who was accused of stealing $8.9 million from investors, was sentenced to seven years in prison yesterday in federal court in Brooklyn, NY, media reports said.

Mr Regan, a Massachusetts-based hedge fund manager, defrauded about 50 investors, beginning in 2000, prosecutors said in court papers.

His River Stream Fund collapsed in April 2008. Mr Regan, the fund’s sole manager, turned himself in May 2008 and pleaded guilty to one count of fraud the following month. He began the fund in 1998 with money from friends and acquaintances, according to the prosecution.

The case is dwarfed by the $65 billion Ponzi fraud of Bernard Madoff, but such cases continue to remind the wealth management industry of the need for continued due diligence and tough scrutiny of investments.

While Mr Regan agreed to pay restitution of the $8.9 million, he filed for bankruptcy protection after turning himself in. Mr Regan took $2.5 million for his personal use, according to court papers.

Regan could face additional criminal charges for failing to file tax returns for 10 years. He also faces a civil suit filed by the Securities and Exchange Commission.