Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
New York (HedgeCo.Net) – Investors in South Florida are fearing the worst, with all eyes turned to Michael Riolo, a Boca Raton resident who may have bilked over $50 million out of investors.
Riolo regularly distributed performance reports to his investors showing admirable returns. Now, three investors are claiming that it was all a sham. Donald Gory, Anthony Leonardo and Nicholas Gory of Broward County have filed a suit against Riolo, claiming he stole more than $1 million from them.
According to the suit, Riolo allegedly conducted a “Madoff-like Ponzi scheme” through his two companies, LaSalle International Clearing Corp. and Sterling Wentworth Currency Group. The investors said they were recently informed that the firms had become insolvent. They are asking the judge to freeze his assets and ban him from transferring any funds.
It seems that wealthy Florida residents have been hit hard by financial scams in recent months. Bernard Madoff, the infamous Ponzi-schemer who lost $50 billion of investor’s money, was a part-time Palm Beach resident who garnered the trust and money of many elite Floridians.
Money manager Arthur Nadel of Sarasota is still missing, along with $350 million, after being exposed as a fraud in what authorities are now dubbing the “mini-Madoff.”
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – New York University is the latest victim in Bernard Madoff’s web of lies, claiming it lost $24 million in a fund of fund that invested with the infamous Ponzi schemer.
According to a complaint filed Christmas Eve in a Manhattan court, J. Esra Merkin invested NYU’s money with Madoff through two of his funds, Gabriel Capital LP and Ariel Fund Ltd., without telling investors and without performing proper due diligence.
Gabriel Capital, which manages approximately $1.5 billion, is planning to liquidate in light of the Madoff losses and because the fund posted losses this year of around 39 percent. A Manhattan judge has barred Merken from liquidated Ariel until a hearing set for January 6th. NYU said it had about $94 million invested in the Ariel Fund.
NYU spokesman John Beckham explained that Merkin “was explicitly told this was not a proper investment vehicle,” when he brought up Madoff. According to NYU however, Merkin had already invested the money with him.
Madoff was arrested on December 11th after an alleged confession to his sons in which he admitted that his firm was one “giant Ponzi scheme.” It is estimated that investors will lose a total of $50 billion, making this the largest Wall Street scam in history.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Stephen Feinberg’s Cerberus Capital Management has followed in the footsteps of many faltering hedge funds this year, limiting client redemptions in one of its funds after investors moved to withdrawal 16.5 percent of their capital, according to a recent letter to investors.
The Cerberus Partners Fund is down 16 percent this year through the end of November. Cerberus said they would honor about 20 percent of the redemption requests, while others might have to wait a year to pull out their cash. However, they are planning on waiving 60 percent of the incentive fee for a year after the losses are made up for any money that is still in the fund as of December 31.
“This is a very hard decision for us, and the realization that taking these steps is now necessary is deeply disappointing,” said the letter.
Cerberus agreed to give its stake in Chrysler to creditors and employees as per an agreement with Uncle Sam for the auto manufacturer to receive a loan. Its ties with the U.S. auto industry, however, don’t end there. They also invest in GMAC, the financing sector of GMC. Both GMC and Chrysler have taken a beating this year, more so than any other American car maker, prompting them to seek a $15 billion bailout from the government.
Cerberus isn’t the only hedge fund choosing to halt redemptions this year. Around 80 reputable firms including Harbinger, Citadel, RAB and Blue Mountain have chosen to freeze funds in an effort to stave off withdrawals fueled by fear in a sour economy.
Fortunately, Cerberus has confirmed that none of their funds are directly or indirectly invested with Bernard Madoff, the Ponzi-schemer who is responsible for bilking $50 billion out of investors.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
