A money manager who claimed he was running a diversified funds-of-funds was charged with taking $13.5 million from institutional investors and sinking it into a fraudulent hedge fund as well as using the money to enrich himself.

Mark Bloom, 57, of New York was charged Wednesday with investing all of the money in his funds-of-funds North Hills with Paul Eustace’s Philadelphia Alternative Asset Management (PAAM). PAAM which was shut down in 2005 after the Commodity Futures Trading Commission discovered it was hiding $140 million in losses.

The institutional investors that trusted Bloom with about $13.5 million include two foundations that support school programs in Nevada and Colorado.

Unknown to his investors, Bloom was getting a kickback of $1.6 million for steering money to PAAM, the U.S. Attorney’s Office in Manhattan alleged in its complaint. Bloom also used investor money in 2003 to buy a $5.2 million apartment on Gracie Square, a few blocks away from New York City’s mayoralty residence, Gracie Square Mansion.

Bloom transferred the apartment to his wife, who sold it in 2007 for $11.2 million, the Commodity Futures Trade Commission charged in a separate court action.

Bloom’s subterfuge began to unravel when in the fall of 2008 the charitable organizations asked for more of their money back. Bloom asked them to wait until the PAAM liquidation was complete. But the organizations ran out of patience and demanded information that their money was safe. Bloom sent them an e-mail which said, “funds/notes are commingled and I do not have a list,” the criminal complaint said.

If he is found guilty, Bloom could be fined up to $5 million. He also faces a maximum 20 years in prison.

Bloom could not be immediately reached for comment.

Bloom was also linked to another fraud that surfaced on Wednesday. He established his North Hill entity in 1995 when he worked in sales and marketing at WG Trading Co., a broker-dealer that was shut down as its principals were hauled off in handcuffs.

Paul Greenwood, 61, of North Salem, N.Y. and Stephen Walsh, 64, of Sand Point, N.Y. were charged with misappropriating what could be as much as $668 million in investor funds.

WG Trading told investors, including charitable and university foundations, retirement and pensions plans, that it was investing in an “enhanced stock indexing” strategy, according to court documents. The firm claimed that it was a conservative trading strategy.

Instead, Greenwood and Walsh misappropriated the majority of the investor funds, the government alleged.

The Commodity Futures Trading Commission also filed an action against the two men. The CFTC claimed that Greenwood and Walsh appropriated about $553 million from investor accounts for their personal use. Greenwood purchased expensive collectible items, including Steiff teddy bears and rare books, as well as horses. Walsh bought a $3 million apartment for his ex-wife, the CFTC said.

If convicted, the two brokers could be fined up to $5 million and could each serve 20 years in prison.

A spokeswoman for the U.S. attorney’s office said there was nothing in the public record as to whether the investigations into the North Hills and the WG Trading cases were related.

WG Trading did not return a phone call from HedgeFund.net seeking comment.

Carnegie Mellon University and the University of Pittsburgh, two of the institutions that invested with WG Trading Co. filed a lawsuit in Pennsylvania federal court Wednesday. The universities are seeking to freeze WG Trading funds.

“At this time, there is insufficient information available to determine the extent of all entities and accounts owned or controlled by Greenwood and Walsh, the current account balances and overall financial condition of each entity,” the universities said in a statement.