Sunday, 24 July 2016
Last updated 1 day ago
Mar 14 2012 | 1:08pm ET
A former Och-Ziff Capital Management employee has sued founder Daniel Och for allegedly forcing him out of the firm.
According to Arnaud Achache, Och all but blackmailed him into giving up his stake in the New York-based hedge fund in exchange for the firm's help in obtaining a visa. Achache is a French citizen but lives in California. He is seeking more than $150 million.
Achache also alleges that his ouster was part of a plan by Och to "systematically eliminate" limited partners after Och-Ziff went public. The lawsuit accuses Och of taking some 53% of the ownership interests granted to those now-former partners.
"The defendants, acting by and through Och for his direct benefit, and to the detriment of plaintiffs, terminated Achache as a limited partner of the Operating Group Entities in violation of the Agreements of Limited Partnership, for the sole purpose of gaining for himself a larger equity interest in breach of his fiduciary duties," the lawsuit alleges.
Achache joined Och-Ziff in 2003 from Société Générale, and received a 1% stake in the firm when he was made a non-managing member a year-and-a-half later. But two years after receiving the stake, it was cut to 0.962% "without explanation." According to Achache, Och-Ziff CFO Joel Frank said the decision was Och's and that Achache could take it up with him, but, "by the tenor of his response, Mr. Frank made it apparent to Achache that it would not be in his best interests to contest this matter with Och." And Achache said he took the hint "because he feared for his career and ability to earn a living."
Rolling over on the "unilateral diminution" only bought Achache another two years and change. He was fired in March 2009, and in May of that year signed a separation agreement giving back 75% of his unvested stake, worth about $25 million.
“In connection with Achache’s visa status and his ability to retain the legal right to remain in the United States as a foreign national no longer employed by a U.S. company, Och expressly stated to Achache that defendants would assist him with the visa process,” the lawsuit alleges. “However, defendants’ conduct thereafter made it clear to Achache that their ongoing assistance with the visa process was conditioned upon his agreement to the terms."
Achache is seeking more than $50 million in damages and more than $100 million in punitive damages.
Och-Ziff has not responded to the lawsuit.