An Imperial College benefactor, who donated £27million for the college's Tanaka Building that opened in March 2004, has been sentenced to five years in jail at a hearing on Friday after being found guilty of misappropriating funds from his hedge-fund business.

Dr Gary Tanaka was arrested in June 2005 along with his business partner, Alberto Vilar. The pair ran hedge-fund Amerindo Investment Advisors Inc from offices in Mayfair, New York and San Francisco. Tanaka has since been in house-arrest in New York and hasn't seen his wife or son since his arrest.

The pair were found guilty of misappropriating a total of £13.5million from their hedge-fund business. The money was taken by the pair for personal use and, in one case heard in court, was used to pay-off another investor.

Vilar, given a 9 year sentence, played down the scale of the case saying that of ths 14,000 investors, "only five clients lost money" and said that he is "more than 95 per cent confident they will be paid".

Meanwhile Tanaka was found guilty of three counts of securities fraud, conspiracy and investment adviser fraud. Tanaka, who completed a PhD in Mathematics here at Imperial, has been placed upon extended bail whilst he appeals his sentence.

Tanaka maintains his innocence, telling Financial Mail: "I am absolutely not a Bernie Madoff. There has never been a fraud case like mine. There has never been a Federal fraud trial in which none of the ?victims? had lost any money. l admit they have had their money frozen in bank accounts for five years. l regret what happened". He also said that he wouldn't work with Vilar again.

Amerindo Investment Advisors had been a successful firm during the rise of the internet, as investments were made in Microsoft, eBay, Amazon and cisco during the early days of internet use. At one point the firm was handling more than £5billion.

It is not thought that any of the money that Tanaka donated to Imperial College was from the misappropriated funds, however the name of the Business School was changed in 2008, with the rumour-mill suggesting that this was to distance the college from Tanaka's fraudulent activities.

However the case will still undoubtedly be embarrassing for the college as the opening of the new "Tanaka" development was very high-profile, with the Queen thanking Tanaka in a speech at the opening ceremony. Tanaka will be a name that is associated with Imperial College for many years to come.

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