The head of a company once responsible for managing millions of dollars of Bermuda Government pension funds has been sentenced to 12 years in jail for fraud.

Mark Lay, of the now-defunct MDL Capital Management was ordered to repay nearly $213 million to the Ohio Bureau of Workers' Compensation for his role in the loss from a hedge-fund investment.

Richard M. Kerger, Lay's attorney, said he planned to file immediate notice to appeal the conviction and stay the sentence to have Lay released from prison pending that appeal. Tuesday's sentencing came nearly nine months after Lay was found guilty on fraud charges.

Lay, 45, had faced a prison term of up to 27 years and three months. But Judge David Dowd granted a variance down to a maximum of 14 years in prison, opting to give him 12 years. Besides the restitution, a jury also previously had ordered Lay to forfeit more than $590,000 in fees he had earned for managing the bureau investment.

Prosecutors objected to the sentence, saying Lay deserved no leniency. Judge Dowd recited a list of more than 20 factors he considered in deciding to grant a variance, including items in Lay's favour such as he had no criminal record and items against him including the amount of the loss to the bureau.

Lay told the judge before sentence was imposed that he accepts responsibility for the loss but that he simply was following a legitimate investment strategy that didn't work out. "I'm not some high-powered Wall Street tycoon," Lay told the judge.

During three days of testimony before sentencing, prosecutors argued that Lay was a cheat and a liar who never accepted responsibility for his actions. They noted he also lost $1.5 million in questionable trading at two Pittsburgh banks 20 years ago.

"He continued to blame others for his actions in the loss of other's people's money," Assistant US Attorney Benita Pearson said in court yesterday.

MDL was hired in 2001 to manage $51.5 million of the Bermuda Government's Contributory Pension Fund and $18.3 million of the island's Public Service Superannuation Fund.

Government fired MDL four years later for poor performance — having paid the company $557,924.48 for its services over that period.

Only a short while later, the company was embroiled in the Bureau of Workers' Compensation scandal. The case emerged from the 2005 discovery that Republican donor Tom Noe was investing state money in rare coins. Noe is serving 18 years in prison.

MDL was one of a number of new fund managers recommended by Bermuda's pension fund consultant Tina Byles Williams (formerly Poitevien) in 2001.

Ms Poitevien, who has described Premier Ewart Brown's wife Wanda Henton Brown as a close friend and mentor, was appointed as consultant to the Public Funds Investment Committee (PFIC) in 2000.

Dr. Brown was reported in 2005 by the Pittsburgh Post-Gazette to have attended the opening of Mr. Lay's new offices in that city in 2003, something that the then-Deputy Premier declined to confirm at the time, stating that his lawyers had advised him not to comment to the media on the matter.

Ms Williams was the organiser of a lunch held in Washington in March 2002, when each invitees was asked to contribute $2,500 to Dr. Brown, a story broken by the Mid-Ocean News. Whether Mr. Lay attended that lunch is unknown.