Lawrence Herzing, the former controller of Contrarian Capital Management LLC, was arrested and charged with embezzling millions of dollars from the hedge fund, federal prosecutors said.

Herzing, 45, of Greenwich, Connecticut, wired funds from Contrarian to accounts he controlled 32 times from 2004 to 2013, with two transfers totaling more than $2.4 million, according to a copy of a criminal complaint provided by prosecutors.

After appearing yesterday in federal court in Bridgeport, Herzing was released on a $5.6 million bond, $2.6 million of which is secured by his home, Deirdre Daly, the U.S. attorney for Connecticut, said in a statement.

Herzing is alleged to have embezzled as much as $12 million from Contrarian, according to a person briefed on the matter. He is charged with wire fraud, according to the complaint, which couldn’t be confirmed in court records.

Herzing had been employed at Contrarian since 2000, most recently as controller, according to his LinkedIn profile. The hedge fund’s management said in a statement to Bloomberg that no current or former clients would be affected by Herzing’s alleged activity.

Full Reimbursement

“Upon discovery that a former employee misappropriated funds, Contrarian immediately commenced a review with outside advisers, reported the matter to the authorities and is cooperating fully with their investigation,” Contrarian said in the e-mailed statement. “The management company has made full reimbursement and has taken prompt action to enhance our internal processes.”

Contrarian, which has about $4 billion in assets under management, was founded in 1995 by Jon Bauer, Janice Stanton and Gil Tenzer, who worked together at Oppenheimer & Co. Bauer had been a managing director there. Stanton headed the bank debt and trade claims desk and Tenzer was a senior analyst at the firm.

A phone call to Herzing’s home in Connecticut went unanswered.

The case is U.S. v. Herzing, U.S. District Court, District of Connecticut (Bridgeport).