New York (HedgeCo.Net) – Dallas hedge fund Highland Capital Management has won a $40 million payout from Credit Suisse, the Wall Street Journal reports, after proving that Credit Suisse AG duped the hedge fund into refinancing a shaky real-estate development.
“They were not doing it to help Highland Capital. We were tricked. We were duped. We were misled,” William Reid, Highland’s attorney, said during his closing arguments last Wednesday.
Highland received an appraisal from Credit Suisse in earlier years, which valued the 3,582 acre property at $891 million from $522 million in 2007. With the appraisal, Highland Capital used the property as collateral against a $540 million loan.
However, the deal defaulted, the property was sold for pennies on the dollar, for $17 million and Highland saw massive losses. All the while, Credit Suisse collected $20 million in fees and sold dividend recapitalization loans totaling $3 billion in restructured products, which all eventually went under.
From 2004 to 2006, Highland increased their investment in the Lake Las Vegas development. Unfortunately, 2008 caused a real estate meltdown and soon after, the property was sold on a fire sale and Highland walked away with massive losses from the deal.
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