WEST PALM BEACH, FL (HEDGECO.NET) – Charles La Bella, a court appointed receiver for the collapsed GMM hedge fund company, told reporters after a court hearing last week that fraud was the root causeof the collapse of the hedge fund company. Bella said, “This is not an investment gone bad, this is a crime scene.� Bella said, so far he has collected about US$15, 000 in cash, and he needs about 30days to put together how many assets may be recovered from the failed hedge fund company.
The SEC sued GMM along with its general partner LF Global Investments and the fund manager Marvin I. Friedman for fraud. The federal regulator also seized the fund’s assets. However no criminal charges have so far been filed, although Nicholas Morgan an SEC attorney is looking closely at the role played by Friedman in the financial problems of the firm.
Morgan speaking of the role of Friedman in the collapse said, “He was at the helm of the ship and, in fact, precipitated a run on the bank,� according to him. Morgan also stated, �We’ve found some altered documents and some that appear to be genuine, but we don’t really know what we have yet. It’s going to take some time to sort out.” he said.
Attorneys for Friedman met with SEC officials and were told that the SEC suspects wrongdoing in the operations of the fund, and furthermore that some official company�s documents were missing. Bella then filed a chapter 11-bankruptcy proceeding and said he has about US$50 million in liabilities. The temporary order, which froze the personal assets of Friedman, was then ordered by U.S. District Judge Barry Ted Moskowitz to be extended.
The court did not issue a decision on Friedman�s request of $16,000 in monthly living expenses from the court, Friedman�s $2.5 million and his La Jolla home is in escrow account. GMM is a hedge-fund partnership of about 200 investors. At one time, GMM controlled as much as $116 million; a few weeks ago its manager told the funds investors that its assets totaled about $70 million.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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