Sunday, 30 April 2017
Last updated 1 day ago
May 19 2008 | 10:47am ET
As far as returns on investment go, Ohio’s bid to make hedge fund manager Mark Lay pay up paid more than 171%. Unfortunately for the state, it amounted to less than 2 cents for every dollar it lost in Lay’s MDL Capital Management.
Lay—who faces up to 20 years in prison after being convicted of criminal fraud last year—agreed to pay $5 million to settle a civil suit brought by the Ohio attorney general. Both state and federal prosecutors allege that Lay’s MDL invested the Ohio Bureau of Workers’ Compensation in a highly-levered offshore hedge fund without authorization. That investment wound up costing the pension $216 million.
In 2005, Ohio sued Lay for the $216 million, settling for $5 million in March. The state paid more than $1.8 million to pursue the case, leaving it with less than $3.2 million for its troubles—just 1.5 cents on the dollar.
Ohio officials explain they expect federal prosecutors to seek more than $200 million in restitution, and that they saw no reason to pursue the case at further cost given the likelihood of recouping any award.