Thursday, 18 December 2014
Last updated 8 hours ago
May 17 2011 | 1:56am ET
Victims of the Bayou Group Ponzi scheme will split another $13 million after the hedge fund’s estate defeated two hedge funds and four other Bayou investors in federal court.
A jury sided with the Bayou estate against Redwood Growth Partners and Heritage Hedged Equity, as well as the other investors. The defendants didn’t prove that they had conducted good-faith due-diligence into Bayou before redeeming the $13 million.
“This is the first time that a Ponzi scheme estate has been successful at a trial in defeating an investor’s good-faith defense and thus recovering the full principal, or amount paid to the redeeming investor,” Gary Mennitt, a lawyer for the estate, told Bloomberg News.
David Baum, who represents Redwood and Heritage Hedged, said his clients would appeal.
Bayou collapsed in 2005, costing investors $450 million. Several of the firm’s executives, including founder Samuel Israel, were convicted of fraud; Israel, who spent several weeks on the run in the summer of 2008 after faking his suicide, was sentenced to 20 years.
All told, the Bayou estate has recovered more than $60 million for the Ponzi scheme’s victims.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.