Alvin Wilkinson (Bloomberg TV)

An investment manager has been sentenced to more than seven years in federal prison for operating a multimillion-dollar fraud scheme that swindled friends and family members, including victims in the Chicago area.

Alvin Wilkinson, the founder of Chicago Index Partners LP and Wilkinson Financial Opportunity Fund LP, both based in Sharon, Connecticut, persuaded at least 30 individuals, many of whom were his friends, family members and colleagues, to invest $13.5 million in his funds. Wilkinson, who previously served as a director at the Chicago Board Options Exchange, claimed he would trade a portfolio of financial instruments on their behalf, including options and futures, and that his trading strategy made money regardless of market conditions.

In reality, Wilkinson did not maintain trading accounts for the funds, and did not use investor funds to trade in options and futures. Wilkinson often used investor funds to cover personal expenses, and he later used the money to pay earlier investors through Ponzi-type payments. His fraud scheme began no later than 1999 and continued until 2016.

Wilkinson, 61, of Sharon, pleaded guilty earlier this year to one count of wire fraud. U.S. District Judge Sharon Johnson Coleman on Dec. 19 sentenced Wilkinson to seven years and four months in prison and ordered him to pay $8 million in restitution to the victims.

The U.S. Commodity Futures Trading Commission, which filed a civil enforcement lawsuit against Wilkinson, provided assistance in the investigation to the U.S. Attorney’s Office for the Northern District of Illinois and the Federal Bureau of Investigation.

“Defendant was a fiduciary who was supposed to act in investors’ best interest at all times,” Assistant U.S. Attorney Nicholas Eichenseer argued in the government’s sentencing memorandum. “While defendant reassured investors with lie after lie, he was living lavishly courtesy of the millions he was secretly diverting to himself.”