West Palm Beach (HedgeCo.Net) – When Pacificor hedge fund founder Michael Klein died in a plane crash last December in the Panama jungle, he left a wake of confusion in what is turning out to be a he-said she-said ordeal.
The Sorenson Trust and Relief Return International, who has $24 million tied up Pacificor, was given a promise by Klein that they could redeem their investments in the fund with 30 days notice. Although the notice period was extended to 90 days after changes were made to the withdrawal policy, Klein assured Stephen Sorenson that he could still withdraw his investments if given notice by December 31, 2007.
The new policy also stated that there must be a one-year lock-up. Again, Klein supposedly assured Sorenson that this would not apply to him since those changes were not slated to take effect until January 1, 2008.
On Dec. 27, Sorenson tried to withdraw $14 million from the Pacificor Fund II and redeem $10 million in stock from Pacificor Offshore Fund. In late January, Pacificor sent a letter to the Sorenson trusts saying that they were bound to the new, 90-day written notice policy that took effect Jan. 1 and they would be unable to redeem their investments at this time.
They went on to say that they can’t give the trusts any special treatment, and they have no proof of Klein promising anything before his death. The trusts are suing the Pacificor funds, in hopes of reclaiming all of their investment, with interest.
“We are very disappointed that Pacificor is unwilling to honor the terms of our written agreements and the personal assurances that Michael Klein made prior to his death,” Sorensen said in an email to the Pacific Coast Business Times.
Pacificor says that although the money will be returned to the trusts after March 31st, they will be charged a 4% fee for withdrawing before the end of the lock-up period.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net]
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