SAN FRANCISCO (Bloomberg) ? The founder of a Bermuda hedge fund has been convicted of five counts of tax fraud for evading evading $1.5 million in taxes, the US Attorney?s Office in San Francisco said.

Randolph S. Bronte, who managed Bermuda-registered Sakura Fund Ltd. that bought and sold Japanese securities, failed to report almost $5 million in activity from his offshore hedge fund activities, a statement from the US Attorney in San Francisco said.

A federal jury found that Bronte, 53, filed false income tax returns in 1998, 1999 and 2000, the US Attorney said.

A former vice president at Morgan Stanley & Co., where he built a business in Japanese equity warrants and convertible bonds in the 1980s, Bronte incorporated Stephen Bronte Advisors LLC in 1999 and formed a private hedge fund in Bermuda called Sakura Fund Ltd., which bought and sold Japanese securities, the US said.

Bronte claimed $1.6 million in losses on tax returns he filed from 1995 to 2003 and paid no income tax in those years, the US said. During that period he bought a $7 million home and claimed his income was a gift from wealthy in-laws in Japan, the US said.

Bronte had hidden business income in offshore accounts and laundered the money through bank accounts and entities in the Cayman Islands, the US said.

?This conviction sends a clear signal that individuals cannot evade taxes by laundering their income through offshore accounts,? said US Attorney Kevin Ryan in the statement.

John Marvin Youngquist, Bronte?s attorney, didn?t respond to a message left on voicemail after hours.

Bronte was convicted of two counts of tax evasion, which each carry a maximum penalty of five years in prison and a $250,000 fine, and three counts of filing false tax returns, which carry a three-year prison term and $250,000 fine.

His sentencing is scheduled for May 18, the US said.