Plainfield Probed On Predatory Lending Accusations

Jan 27 2010 | 4:47am ET

Newly-minted Manhattan District Attorney Cyrus Vance is investigating a prominent Connecticut hedge fund for fraud.

Plainfield Asset Management said it was cooperating with the probe, which it believes was sparked by a borrower that is suing the Greenwich, Conn., hedge fund, which manages $3.3 billion. Several companies in which Plainfield took stakes have accused it of using its “predatory lending” to take control of their assets for pennies on the dollar.

Some of those companies hired Robert Seiden, a former prosecutor at the Manhattan D.A.’s office who now works as a private investigator, Fortune magazine reports. Seiden offered his findings to both the D.A. and the Securities and Exchange Commission, and said the former has already interviewed several of his clients.

“I uncovered a pattern of activity that went beyond vulture investors,” Seiden told Bloomberg News. “Plainfield would find thriving companies looking to expand and create artificial defaults. They were taking over these companies through artificial defaults.”

Plainfield denies any wrongdoing.

“We are completely confident that this and any other investigation will conclude that there is absolutely no merit to the allegations against us,” Thomas Fritsch, Plainfield’s general counsel, said.


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