A principal in a former New York Islanders ownership group pleaded guilty to a massive fraud on Friday and faces up to 20 years in prison.
Stephen Walsh, 69, of Sands Point, who served as an Islanders executive from 1991 until 2000, agreed to forfeit $50 million as part of his plea in federal court in Manhattan to securities fraud for scamming customers of his investment advisory business.
The charges had been pending since 2009. Walsh's co-defendant and business partner Paul Greenwood, of New Salem, Conn., also a former Islanders executive, pleaded guilty in 2010. Greenwood has not been sentenced.
"Stephen Walsh and his partner Paul Greenwood ran an investment operation that was a veritable moneymaking machine -- for them," U.S. Attorney Preet Bharara said. "Their purported investing strategy wasn't nearly as effective as their fraudulent sales pitch."
Walsh and Greenwood were part of a group that bought a stake in the Islanders in 1991 joining John Pickett as owners.
During their tenure, the team made a notorious and unpopular move to alter the Islanders logo to depict a fisherman.
After an aborted sale to fraudster John Spano, they sold the team to a group led by Steven Gluckstern and Howard Milstein in 1998. Gluckstern and Milstein sold the team to Charles Wang and Sanjay Kumar in 2000.
Prosecutors charged that from 1996 to 2009 Walsh and Greenwood solicited billions of dollars from investors -- including charities, universities and pension plans -- for WG Trading Company by pitching a strategy they said had a track record of beating indexes.
But they allegedly used the funds to finance a lavish lifestyle.
Walsh was charged with using stolen money to finance a divorce settlement and fund businesses for his children, and Greenwood with purchasing expensive stallions and high-priced teddy bears.
Walsh's sentencing was scheduled for July 29.