Sunday, 23 October 2016
Last updated 1 day ago
May 3 2007 | 12:14pm ET
Misery loves company, and Ritchie Capital is looking to spread some around.
The Geneva, Ill.-based hedge fund has been awash in bad news for much of the last year, shuttering its energy hedge fund at the same time Amaranth Advisors went under, spinning off its global macro fund and selling its flagship multi-strategy fund. Now, the firm is accusing a life insurer of fraud, seeking over $2 billion in damages.
In a complaint filed against Coventry First—which is also fending off a fraud lawsuit filed by then-New York Attorney General Eliot Spitzer—Ritchie accuses the insurer of fraud, breach of fiduciary duty and breach of contract, all stemming from a 2005 deal to invest in life insurance products.
"Coventry First participated in numerous racketeering activities and fraud, such as bid rigging and concealing both unlawful conduct and an investigation by the Attorney General of New York, unbeknownst to Ritchie Capital," Ritchie lawyer Thomas Puccio said. "Had Ritchie Capital known that Coventry engaged in these illegal practices, it would have never done business with the company."
Ritchie claims damages of $700 million, but filed the suit under the federal Racketeer Influenced and Corrupt Organizations Act—better known as RICO, and best known as an anti-organized crime law—entitling it to triple damages.
Coventry quickly responded, dismissing Ritchie's lawsuit as "a cheap publicity stunt to divert attention from from its own well-documented problems" and promised to "seek an immediate dismissal with prejudice."
"It is unfortunate the Ritchie Capital has taken this action in an apparent attempt to blame others for its own shortcomings or wrongdoings," Coventry said in a statement. "Coventry is a significant investor in the Ritchie life settlement portfolio, and is concerned that this action by Ritchie Capital Management may put this investment at risk."