Michael Berger, a former hedge fund manager who fled New York in 2002 after pleading guilty in a $400 million securities fraud, was captured and jailed by Austrian police.

Berger, 35, who ran Manhattan Investment Fund Ltd., confessed in 2000 that he lied about the fund’s performance. The fugitive, who failed to appear at his 2002 sentencing in Manhattan federal court, was arrested July 6 by highway police in Seewalchen, said Petra Stranzinger, a spokeswoman for the public prosecutor in Wels, where Berger is being held. “It was one of the earlier hedge fund meltdowns,” said Jay Musoff, a former assistant U.S. attorney who prosecuted Berger.

Since 2002, Austria has had an arrest warrant for Berger, whose fraud involved three of that country’s banks. Defense lawyer Joseph Bondy, who represented Berger in 2002, said he may be extradited to America to face a 6 1/2 year term and a possible bail-jumping charge, which carries an extra five-year term.

“I haven’t spoken to him since the putative sentencing,” Mr. Bondy said yesterday in an interview. Berger said he concealed the fund’s losses from investors starting in 1996 by falsifying statements and other documents sent to clients. The fund lost $400 million over four years, federal prosecutors in New York said.

Rebekah Carmichael, a spokeswoman for U.S. Attorney Michael Garcia in New York, declined to comment.

In his guilty plea, Berger confessed to hiding losses suffered from bad bets on Internet stocks by doctoring brokerage statements from Bear Stearns Cos. Some of the investors were Bank Austria, which said it invested $28 million, and Nikko Securities, which said it invested $18 million. Two other Austrian banks said they invested as much as $4 million with Berger.

Mr. Musoff said he was unaware Berger had been arrested.

“He has been? Wow,” Mr. Musoff said. “I expect he’ll make a bunch of motions,” added Mr. Musoff, now a partner at Orrick Herrington & Sutcliffe in New York. Berger had been in Austria for about a week before his arrest, said police officer Helmut Reinmueller. Berger, driving a red Opel Corsa, was probably on the way to Salzburg from Vienna, he said.

The Austrian police and the U.S. Federal Bureau of Investigation intensified their search for Berger in recent months after receiving information allowing them to track him down, Mr. Reinmueller said, declining to elaborate.

Some 15 policemen were dispatched to arrest Berger. The police are now investigating whether he had false passports and are probing where he was hiding during the past five years, he said.

U.S. prosecutors may have difficulty extraditing Berger if he’s an Austrian citizen, as Austrian police said yesterday and the U.S. Securities and Exchange Commission said in 2001. The FBI says on its Web site that Berger is a British citizen.

“Austrians are generally not extradited,” said Gerhard Jarosch, a spokesman for the public prosecutor in Vienna. “In case of a Briton, that wouldn’t be a problem.” Mr. Bondy, the defense lawyer, said Berger may also argue that the crime to which he pleaded guilty in the U.S. isn’t an offense in Austria, or that it’s too late for the Austrians to extradite him because he was never charged there.

Berger came to New York from Austria in 1993, just before his 23rd birthday, according to court documents. He hadn’t finished college and enrolled in a teller-training program at a savings and loan bank in Austria, working in its money management group briefly before heading to the America, according to his former employer, Salzburger Sparkasse Bank AG.

By 1996, Berger had opened Manhattan Investment Fund on Park Avenue, eventually raising more than $575 million from investors.

Over the next four years, Berger reported gains of between 12% and 28% a year to his 280 investors, according to court papers. In reality, he was hemorrhaging cash — about $400 million in all — as he made money-losing bets that technology shares would tumble, according to court papers.