West Palm Beach (HedgeCo.net) – On the 18 of March, the Australian Hedge Fund & Research team at Bronte Capital began dropping hints regarding an un-named $60 million dollar Ponzi Scheme. In a blog entry named "Curiouser and Curiouser" Bronte Capital described the fraud and to support support their claims, posted 2 pieces of Ponta Negra marketing material on the ScribD document sharing site.
The following day, Lawyers representing Ponta Negra contacted John Hempton of Bronte Capital and threatened them with legal action if they did not immediately take down the blog entry. Under the threat of legal action Bronte Capital removed the post.
Unbeknownst to Bronte Capital, the SEC was also investigating the Ponta Negra funds and on the 27th of April the SEC annouced that they were freezing the assets of the 2 Hedge Funds stating that, according to the complaint "on at least two occasions, Francesco Rusciano, 27, of Ponta Negra Group LLC forged brokerage account statements to make it appear that a hedge fund account had millions more dollars in assets than it had."
The SEC announcement restarted the discussion a the Bronte Capital blog and as of the 1st of May, four detailed blog entries have been posted.
The blog entries detail the connections and often blurry lines between Paradigm, owned by the Biden family and the Ponta Negra funds. The common link at the heart of the controversy is Jeffry Schneider and his team at Onyx Captial who worked as hedge fund marketers for both funds. Jeffry Schneider was linked earlier in the year to Stanford Capital Management who is under investigation by the SEC alegedly for running a ponzi scheme. Jeffry Schneider, Onyx Capital and Ponta Negra subleased office space (and infrastructure) from Paradigm.
For a detailed summary read FT Alphaville’s story titled "Untangling floor 17, 650 5th Avenue". Ongoing details of the case are posted at Bronte Capital’s blog.
As detailed on the Bronte Capital blog, Jeffry Schneider had a brief relationship with HedgeCo Networks which ended in a material breach of contract by Jeffry Schneider and ongoing legal action by HedgeCo Networks against Jeffry Schneider and Onyx Capital. Ponta Negra submitted its fund to the HedgeCo.Net database, but was denied due to concerns by the HedgeCo.Net review board.
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