Former head of Cobalt sentenced in $23M fraud case

September 22, 2010 07:00PM

The former owner, president and CEO of Cobalt Financial, was sentenced today in Manhattan Federal Court to three years in prison for his involvement in a fraud that raised more than $23 million from over 250 investors in private placement real estate offerings. William Foster, the former CEO, and co-founders Mark Shapiro and Irving Stitsky founded Cobalt in 2003 and used the firm to acquire and develop multi-family properties throughout the United States. They got people to invest in the company by mispresenting Cobalt’s operating history, failing to reveal that the company was headed by two felons, Shapiro and Stitsky, and falsely claiming to own several properties, according to the U.S. Attorney’s office. Cobalt was headquartered in Massachusetts and had a telemarketing center in Great Neck, NY. In addition to the prison term, Foster, 70, was ordered to pay $22 million in restitution and to forfeit $23 million in proceeds. Stitsky, 55, was sentenced to 85 years in prison in July and Shaprio, 50, is set to be sentenced Oct. 14. TRD