Och-Ziff Burned In Alleged Japanese Fraud

Apr 18 2008 | 3:03am ET

Och-Ziff Capital Management Group said it has been ensnared in a Japanese fraud.

The Wall Street Journal reports that the New York-based hedge fund lost about US$77 million in the scheme, which also caught Lehman Brothers. Och-Ziff said that the loss has already been written off and was reflected in the newly-public firm’s most recent results statement.

The fraud allegedly involved employees of Japanese trading firm Marubeni Corp., and began in November. Those Marubeni staffers seem to have used the firm’s offices, computers and letterheads to raise phony bridge loans for Japanese hospitals to buy new medical equipment. A Hong Kong-based Och-Ziff affiliate made the loans, the firm said.

Lehman Brothers last month field suit in Tokyo seeking to retrieve its US$344 million. It names Marubeni as a defendant, though the trading firm denies any involvement and said that Lehman should have been “suspicious” about the allegedly phony documents.

“The investment, which has not yet been recovered, is not material to any of Och-Ziff’s funds or to its publicly-traded holding company,” Och-Ziff said in a statement. “The firm is currently pursuing all avenues to recover its investment.

Och-Ziff, one of the largest hedge fund managers in the world with more than $32 billion in assets under management, went public in November.


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...