Elliott Burned In Dreier Scam

Jan 27 2009 | 12:24pm ET

Hedge fund Elliott Management Corp. pronounced itself embarrassed and annoyed as it admitted that it had been duped by accused fraudster Marc Dreier.

Elliott told investors that bought phony promissory notes from Dreier, a prominent New York lawyer, in October, Bloomberg News reports. Dreier was arrested last month and accused of defrauding hedge funds and other investors of more than $400 million, including the scheme to sell fake notes issued by New York developer Sheldon Solow that took in two hedge funds to the tune of $100 million.

“There are many reasons why funds lose money, but being defrauded is among the most embarrassing and annoying,” New York-based Elliott said in its quarterly letter to clients. “We continue to adapt our processes to keep several steps ahead of fraudsters, and we maintain an attitude of probing skepticism. But sometimes we get hooked, as in the Dreier case.”

The $12.8 billion hedge fund’s losses in the alleged Dreier scam amount to less than 1% of its assets under management, according to Bloomberg.

Elliott’s flagship hedge fund, Elliott Associates, lost 9.2% in the fourth quarter, its worst-ever quarterly loss, leaving it down 3.1% on the year.

Dreier was arrested in Toronto in early December and charged with impersonating a lawyer for the Ontario Teachers’ Pension Plan at a meeting with Fortress Investment Group. He was arrested upon his return to the U.S. and charged with fraud. He remains in prison, so far unable to come up with $20 million to meet bail, and faces up to 20 years in prison if convicted.


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.