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Mar 12 2010 | 5:04pm ET
Camulos Capital has countersued one of its co-founders, alleging a variety of malfeasance. But William Seibold says he’s simply being bullied.
According to Camulos, Seibold—who sued the hedge fund last year, accusing it and managing partner Richard Brennan with forcing him out of the firm and withholding millions in investments and his fair share for the firm—stole proprietary information on his way out the door. The firm also claims Seibold did little for the firm besides go on lavish “European junkets.”
Seibold and his lawyer, James Masella, say the allegations are baseless.
“They’re bullies,” Seibold told FINalternatives of his former partners. “And that’s how they’ve acted. The $4.7 million, they know they can’t keep. But if they didn’t give it to me, it would deprive me of the money to go after them.”
Camulos is currently holding nearly $4.7 million Seibold redeemed from the Camulos fund at the end of 2007.
In its counterclaim, Camulos says Seibold “misappropriated sensitive and proprietary information upon leaving Camulos, poached its investors and used confidential information he gleaned from Camulos to compete against it even while he was still at Camulos as he planned to create his own new competing investment firm,” Noroton Capital Management. Camulos also claims that Seibold recruited its largest investor, Man Group fund of hedge funds arm RMF Investment Management—“during the business trips Seibold took while a partner of Camulos.”
“Because funds-of-funds such as these have a certain amount of money allocated for particular areas of investment, the money Seibold improperly received from this European investor is money that Camulos did not receive,” Camulos alleges.
Not so, says Seibold.
“The fund that backed us is a private equity-style fund within RMF that invests only in seed deals,” he said. “There’s no way that they would have given $50 million to Camulos, a $2.1 billion fund.” And he notes that he turned over the allegedly confidential information to his lawyer in Connecticut when Camulos cried foul, “so obviously I’m not using it.”
Camulos also accuses Seibold of being a less-than-ideal hedge fund manager. The firm accuses him of taking “many” naps on the job, not participating in the investment process and admitting to Brennan that he was “mailing it in.”
According to Seibold, Camulos’ characterization of his work at the firm is simple character assassination.
“We had differences of opinion about investments,” he said. “But I was busting my ass.”
Camulos’ counterclaims allege breach of fiduciary duty, breach of contract, tortious interference and conversion, among other claims. It is seeking money damages, disgorgement of allegedly ill-gotten gains and profits, the return of proprietary information and costs.
Seibold says his former firm is simply playing “tactical games to make me spend money and delay my ability to get my money back.”
Masella, Seibold’s lawyer, said he will file his side’s response to the Camulos allegations today.
Camulos is also seeking to have Seibold’s law firm, Blank Rome, removed from the case. Blank Rome represented Camulos in a pair of regulatory matters involving the Federal Energy Regulatory Commission and the hedge fund contends that the New York law firm remains its counsel.
“No client, Camulos included, is amenable to having its current lawyers sue it, particularly considering the allegation here, and then fire the client when it refuses to provide a conflicts waiver,” Daniel Goldberg, who represents Camulos, said.
Masella said Blank Rome worked for Camulos on an engagement-by-engagement basis. “When the engagement ends, the relationship terminates,” he said. And that happened, according to Masella, on July 6 of last year.
A hearing on the Connecticut disqualification motion is scheduled for March 22 in Stamford; Camulos is also seeking to have Blank Rome disqualified in Delaware.